10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

_________________________

FORM 10-Q

X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020 OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

(Exact name of registrant as specified in its charter)

Ohio	31-0888951
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio	45242
(Address of principal executive offices)	(Zip Code)
(513) 793-3200
Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	LYTS	NASDAQ Global Select Market

Indicate by checkmark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  YES   ☒    NO   ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

YES   ☒    NO   ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒                          Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES   ☐    NO   ☒

As of April 27, 2020, there were 26,192,949 shares of the registrant's common stock, no par value per share, outstanding.  

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2020

INDEX

			Begins on Page
PART I.  Financial Information
	ITEM 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income (Loss)	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Shareholders’ Equity	7
		Condensed Consolidated Statements of Cash Flows	8
		Notes to Condensed Consolidated Financial Statements	9
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	32
	ITEM 4.	Controls and Procedures	32
PART II.  Other Information
	ITEM 1A.	Risk Factors	33
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	ITEM 6.	Exhibits	34
Signatures			35

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands, except per share data)	2020			2019			2020			2019
Net Sales	$	71,010		$	72,832		$	242,088		$	247,330
Cost of products and services sold		54,834			57,180			183,558			190,207
Restructuring costs		223			261			758			792
Severance costs		11			54			11			77
Gross profit		15,942			15,337			57,761			56,254
Selling and administrative expenses		17,032			17,515			55,045			54,990
Restructuring (gain) costs		(3,729	)		107			(8,576	)		132
Severance costs		8			(12	)		62			457
Impairment of goodwill		-			-			-			20,165
Transition and realignment costs		-			-			-			120
Operating income (loss)		2,631			(2,273	)		11,230			(19,610	)
Interest (income)		(1	)		(6	)		(3	)		(37	)
Interest expense		129			585			795			1,749
Other expense		642			183			633			183
Income (loss) before income taxes		1,861			(3,035	)		9,805			(21,505	)
Income tax expense (benefit)		-			133			1,726			(4,304	)
Net income (loss)	$	1,861		$	(3,168	)	$	8,079		$	(17,201	)
Earnings (loss) per common share (see Note 4)
Basic	$	0.07		$	(0.12	)	$	0.31		$	(0.66	)
Diluted	$	0.07		$	(0.12	)	$	0.31		$	(0.66	)
Weighted average common shares outstanding
Basic		26,301			26,132			26,250			26,083
Diluted		26,623			26,132			26,423			26,083

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 3

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2020			2019			2020			2019
Net Income (Loss)	$	1,861		$	(3,168	)	$	8,079		$	(17,201	)
Foreign currency translation adjustment		(116	)		-			(110	)		-
Comprehensive Income (Loss)	$	1,745		$	(3,168	)	$	7,969		$	(17,201	)

Page 4

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
(In thousands, except shares)	2020			2019
ASSETS
Current assets
	$	820		$	966
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $267 and $879, respectively		45,957			54,728
Inventories		43,597			43,512
Refundable income tax		1,807			882
Asset held for sale		-			7,512
Other current assets		3,106			3,380
Total current assets		95,287			110,980
Property, Plant and Equipment, at cost
Land		3,933			4,576
Buildings		20,215			27,015
Machinery and equipment		70,733			73,185
Construction in progress		803			455
		95,684			105,231
Less accumulated depreciation		(70,981	)		(73,255	)
Net property, plant and equipment		24,703			31,976
Goodwill		10,373			10,373
Other Intangible Assets, net		30,631			32,647
Other Long-Term Assets, net		21,238			15,124
Total assets	$	182,232		$	201,100

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 5

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
(In thousands, except shares)	2020			2019
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	18,772		$	18,664
Accrued expenses		20,106			21,211
Total current liabilities		38,878			39,875
Long-Term Debt		7,919			39,541
Other Long-Term Liabilities		10,728			1,747
Commitments and Contingencies (Note 12)		-			-
Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		-			-
Common shares, without par value; Authorized 40,000,000 shares; Outstanding 26,162,209 and 25,967,275 shares, respectively		126,918			125,729
Treasury shares, without par value		(1,057	)		(1,468	)
Deferred compensation plan		1,055			1,468
Retained (loss)		(2,115	)		(5,808	)
Accumulated other comprehensive (loss) income		(94	)		16
Total shareholders' equity		124,707			119,937
Total liabilities & shareholders' equity	$	182,232		$	201,100

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 6

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Common Shares				Treasury Shares						Key Executive			Accumulated Other		Retained			Total
	Number Of				Number Of						Compensation			Comprehensive		Earnings			Shareholders'
(In thousands, except per share data)	Shares		Amount		Shares			Amount			Amount			Income (Loss)		(Loss)			Equity
Balance at June 30, 2018		25,884	$	124,104		(242	)	$	(2,110	)	$	2,133			-	$	15,124		$	139,251
Net Loss		-		-		-			-			-			-		(17,201	)		(17,201	)
Other comprehensive income		-		-		-			-			-			-		-			-
Stock compensation awards		70		265		-			-			-			-		-			265
Restricted stock units issued		98		-		-			-			-			-		-			-
Shares issued for deferred compensation		65		257		-			-			-			-		-			257
Activity of treasury shares, net		-		-		19			481			-			-		-			481
Deferred stock compensation		-		-		-			-			(474	)		-		-			(474	)
Stock-based compensation expense		-		951		-			-			-			-		-			951
Dividends — $0.20 per share		-		-		-			-			-			-		(3,882	)		(3,882	)
Cumulative effect of adoption of accounting guidance		-		-		-			-			-			-		591			591
Balance at March 31, 2019		26,117	$	125,577		(223	)	$	(1,629	)	$	1,659		$	-	$	(5,368	)	$	120,239

	Common Shares				Treasury Shares						Key Executive			Accumulated Other						Total
	Number Of				Number Of						Compensation			Comprehensive			Retained			Shareholders'
	Shares		Amount		Shares			Amount			Amount			Income (Loss)			Earnings			Equity
Balance at June 30, 2019		26,176	$	125,729		(209	)	$	(1,468	)	$	1,468			16		$	(5,808	)	$	119,937
Net Income		-		-		-			-			-			-			8,079			8,079
Other comprehensive income		-		-		-			-			-			(110	)		-			(110	)
Stock compensation awards		48		225		-			-			-			-			-			225
Restricted stock units issued		21		-		-			-			-			-			-			-
Shares issued for deferred compensation		54		296		-			-			-			-			-			296
Activity of treasury shares, net		-		-		42			411			-			-			-			411
Deferred stock compensation		-		-		-			-			(413	)		-			-			(413	)
Stock-based compensation expense		-		494		-			-			-			-			-			494
Stock options exercised, net		29		174		-			-			-			-			-			174
Dividends — $0.20 per share		-		-		-			-			-			-			(3,958	)		(3,958	)
Cumulative effect of adoption of accounting guidance		-		-		-			-			-			-			(428	)		(428	)
Balance at March 31, 2020		26,328	$	126,918		(167	)	$	(1,057	)	$	1,055		$	(94	)	$	(2,115	)	$	124,707

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 7

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	March 31,
(In thousands)	2020			2019
Cash Flows from Operating Activities
Net income (loss)	$	8,079		$	(17,201	)
Non-cash items included in net income (loss)
Depreciation and amortization		6,631			7,787
Deferred income taxes		2,637			(4,077	)
Impairment of goodwill		-			20,165
Deferred compensation plan		296			264
Stock compensation expense		494			951
Issuance of common shares as compensation		225			265
Gain on disposition of fixed assets		(8,510	)		(22	)
Allowance for doubtful accounts		(105	)		505
Inventory obsolescence reserve		1,720			2,574
Changes in certain assets and liabilities
Accounts receivable		8,322			2,902
Inventories		(1,981	)		(7,368	)
Refundable income taxes		(1,170	)		323
Accounts payable		1,015			2,705
Accrued expenses and other		(258	)		(4,373	)
Customer prepayments		(298	)		985
Net cash flows provided by operating activities		17,097			6,385
Cash Flows from Investing Activities
Proceeds from the sale of assets		20,040			-
Purchases of property, plant and equipment		(1,538	)		(2,348	)
Net cash flows provided by (used in) investing activities		18,502			(2,348	)
Cash Flows from Financing Activities
Payments of long-term debt		(169,671	)		(89,489	)
Borrowings of long-term debt		138,049			87,941
Cash dividends paid		(3,958	)		(3,882	)
Shares withheld for employees' taxes		(124	)		(99	)
Proceeds from stock option exercises		174			-
Net cash flows used in financing activities		(35,530	)		(5,529	)
Change related to foreign currency		(215	)		-
Decrease in cash and cash equivalents		(146	)		(1,492	)
Cash and cash equivalents at beginning of period		966			3,178
Cash and cash equivalents at end of period	$	820		$	1,686

 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 8

LSI INDUSTRIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, 2020, the results of its operations for the three and nine month periods ended March 31, 2020 and 2019, and its cash flows for the nine month periods ended March 31, 2020 and 2019. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2019 Annual Report on Form 10-K.  Financial information as of June 30, 2019 has been derived from the Company’s audited consolidated financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2019 Annual Report on Form 10-K. Significant changes to our accounting policies as a result of adopting ASU-2014-09 “Revenue from Contracts with Customers” (Topic 606) in the first quarter of fiscal 2019 and adopting ASU 2016-02, “Leases” in the first quarter of fiscal 2020 are discussed below.

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.

A number of the Company's Graphics and select lighting products are highly customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore, recognizes revenue over time. The customized product types are as follows:

● Customer specific print graphics branding

● Electrical components based on customer specifications

● Digital signage and related media content

The Company also offers installation services for its Graphics and select lighting products. Installation revenue is recognized over time as our customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the contract.

Page 9

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table presents a reconciliation of the disaggregation by reportable segments.

	Three Months Ended				Nine Months Ended
(In thousands)	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	43,222	$	15,093	$	147,260	$	50,339
Products and services transferred over time		5,791		6,904		18,380		26,109
	$	49,013	$	21,997	$	165,640	$	76,448

	Three Months Ended				Nine Months Ended
	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	42,536	$	2,234	$	143,615	$	13,515
Legacy products		5,949		14,444		20,252		47,155
Turnkey services and other		528		5,319		1,773		15,778
	$	49,013	$	21,997	$	165,640	$	76,448

Legacy products include lighting fixtures utilizing light sources other than LED technology and printed two- and three-dimensional graphic products. Turnkey services and other includes project management and installation services along with shipping and handling charges.

Practical Expedients and Exemptions

● The Company’s contracts with customers have an expected duration of one year or less, as such the Company applies the practical expedient to expense sales commissions as incurred, and have omitted disclosures on the amount of remaining performance obligations.

● Shipping costs that are not material in context of the delivery of products are expensed as incurred.

● The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing, therefore, payments do not contain significant financing components.

● The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

Page 10

New Accounting Pronouncements:

On July 1, 2018, the Company adopted ASU 2014-09. “Revenue from Contracts with Customers,” (Topic 606) using the modified retrospective adoption method which requires a cumulative effect adjustment to the opening balance of retained earnings. This approach was applied to contracts that were not completed as of June 30, 2018. Results for reporting periods beginning July 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net increase to beginning retained earnings of $591,000 on July 1, 2018 due to the cumulative impact of adopting Topic 606, as described below.

ASC 606 Cumulative Impact
(in thousands)	Balance as of					Balance as of
	June 30, 2018		Adjustments			July 1, 2018
Assets:
Accounts receivable, net	$	50,609	$	4,935		$	55,544
Inventories, net	$	50,994	$	(4,167	)	$	46,827
Other long-term assets, net	$	9,786	$	(177	)	$	9,609
Shareholder's Equity:
Retained earnings	$	15,124	$	591		$	15,715

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal and interim periods within those years, beginning after December 15, 2018, or the Company’s fiscal 2020, with early adoption permitted. The Company adopted this guidance effective July 1, 2019 using a modified-retrospective transition method, under which it elected not to adjust comparative periods. The Company elected the package of practical expedients permitted under the new guidance to not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. In addition, the Company elected the practical expedient to not separate lease and non-lease component and the accounting policy election to not present leases with an initial term of twelve months or less on the balance sheet.

The Company’s most significant leases are those relating to certain manufacturing facilities along with a small office space. Besides these real estate leases, most other leases are insignificant and consist of leases related to a vehicle, forklifts, small tooling, and various office equipment. All of the Company’s leases are operating leases and are included in other long-term assets with the corresponding liability in other long-term liabilities. Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use assets (ROU assets) of $10.4 million and lease liabilities of $10.8 million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of July 1, 2019 for the Company’s real estate leases. The adoption of the standard resulted in no material impact to consolidated statements of operations or consolidated statements of cash flow. (Refer to Note 15)

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed.  No items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements other than noted below.

In December 2019, a novel coronavirus disease (“COVID-19”) was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic.

As of the date of this filing, the Company’s locations and primary suppliers continue to be operating. However, the broader implications of COVID-19 on the Company’s results of operations and overall financial performance remain uncertain. The Company may experience constrained supply or slowed customer demand that could materially impact its business, results of operations and overall financial performance in future periods. See Risk Factors in Part II, Item 1A of this Form 10-Q for further discussion of the possible impact of the COVID-19 pandemic on the Company’s business.

NOTE 3 - SEGMENT REPORTING INFORMATION 

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s two operating segments are Lighting and Graphics, with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes outdoor and indoor lighting utilizing both traditional and LED light sources that have been fabricated and assembled for the Company’s markets, primarily petroleum / convenience stores, automotive dealerships, quick-service restaurants, grocery and pharmacy store, and retail/national accounts. The Company also addresses lighting product customers through the commercial, industrial, stock and flow, and renovation channels. The Lighting Segment also includes the design, engineering, and manufacturing of electronic circuit boards, assemblies and sub-assemblies used to manufacture certain LED light fixtures and sold directly to customers.

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements such as traditional graphics, interior branding, electrical and architectural signage, active digital signage along with the management of media content related to digital signage, LED video screens, and menu board systems that are either digital or traditional by design. These products are used in visual image programs in several markets including, but not limited to the petroleum / convenience store market, multi-site retail operations, banking, and quick-service restaurants. The Graphics Segment implements, installs and provides program management services related to products sold by the Graphics Segment and by the Lighting Segment.

Page 11

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item.  These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit expenses, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There was no concentration of consolidated net sales in the three and nine months ended March 31, 2020 and 2019.  There was no concentration of accounts receivable at March 31, 2020 or June 30, 2019. 

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, 2020 and March 31, 2019:

	Three Months Ended						Nine Months Ended
(In thousands)	March 31						March 31
	2020			2019			2020			2019
Net Sales:
Lighting Segment	$	49,013		$	52,785		$	165,640		$	177,871
Graphics Segment		21,997			20,047			76,448			69,459
	$	71,010		$	72,832		$	242,088		$	247,330
Operating Income (Loss):
Lighting Segment	$	1,102		$	691		$	13,411		$	(13,911	)
Graphics Segment		4,015			(898	)		6,394			2,350
Corporate and Eliminations		(2,486	)		(2,066	)		(8,575	)		(8,049	)
	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)
Capital Expenditures:
Lighting Segment	$	126		$	769		$	1,013		$	1,633
Graphics Segment		234			-			279			515
Corporate and Eliminations		59			-			246			200
	$	419		$	769		$	1,538		$	2,348
Depreciation and Amortization:
Lighting Segment	$	1,650		$	1,925		$	5,089		$	5,867
Graphics Segment		347			391			1,107			1,183
Corporate and Eliminations		83			236			435			737
	$	2,080		$	2,552		$	6,631		$	7,787

	March 31, 2020		June 30, 2019
Identifiable Assets:
Lighting Segment	$	130,370	$	142,105
Graphics Segment		35,213		40,914
Corporate and Eliminations		16,649		18,081
	$	182,232	$	201,100

The segment net sales reported above represent sales to external customers.  Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a 10% mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2020		2019		2020		2019
Lighting Segment inter-segment net sales	$	744	$	479	$	2,415	$	1,758
Graphics Segment inter-segment net sales	$	153	$	96	$	251	$	171

The Company’s operations are located solely within North America. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within North America.

Page 12

NOTE 4 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	March 31					March 31
	2020		2019			2020		2019
BASIC EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding during the period, net of treasury shares		26,151		25,893			26,087		25,828
Weighted average vested restricted stock units outstanding		6		33			7		40
Weighted average shares outstanding in the Deferred Compensation Plan during the period		144		206			156		215
Weighted average shares outstanding		26,301		26,132			26,250		26,083
Basic income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
DILUTED EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding
Basic		26,301		26,132			26,250		26,083
Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		322		-			173		-
Weighted average shares outstanding		26,623		26,132			26,423		26,083
Diluted income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
Anti-dilutive securities (b)		1,875		3,788			2,038		3,702

(a) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(b) Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2020 because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares. For the three and nine months ended March 31, 2019, the effect of dilutive securities was not included in the calculation of diluted loss per share because there was a net loss for the period.

Page 13

NOTE 5 - INVENTORIES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2020		2019
Inventories:
Raw materials	$	29,457	$	27,927
Work-in-progress		1,592		2,193
Finished goods		12,548		13,392
Total Inventories	$	43,597	$	43,512

NOTE 6 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2020		2019
Accrued Expenses:
Compensation and benefits	$	5,095	$	5,319
Customer prepayments		1,443		1,768
Accrued sales commissions		1,556		1,301
Accrued warranty		7,464		7,687
Other accrued expenses		4,548		5,136
Total Accrued Expenses	$	20,106	$	21,211

NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The fair value measurements of the reporting units are based on significant inputs not observable in the market and thus represent Level 3 measurements as defined by ASC 820 “Fair Value Measurements.” The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of two reporting units that contain goodwill. There is one reporting unit within the Lighting Segment and one reporting unit within the Graphics Segment. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Page 14

As of March 1, 2020, the Company performed its annual goodwill impairment test on the two reporting units that contain goodwill. The preliminary goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $31.6 million or 33% above the carrying value of this reporting unit including goodwill. The preliminary goodwill impairment test of the reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value of $4.7 million or 619% above the carrying value of the reporting unit including goodwill. The definitive impairment test is expected to be completed in the fourth quarter of fiscal 2020. It is anticipated that the results of the test will not change when the test is complete.

A significant decline in the Company’s stock price during March 2020 related to the COVID-19 pandemic led management to conclude that a triggering event occurred. As a result, an interim goodwill impairment test subsequent to the March 1 testing date was required for both reporting units as of March 31, 2020. The result of the impairment test on both reporting units indicated that goodwill was not impaired.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

Goodwill
(In thousands)	Lighting			Graphics
	Segment			Segment			Total
Balance as of June 30, 2019
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of June 30, 2019	$	9,208		$	1,165		$	10,373
Balance as of March 31, 2020
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of March 31, 2020	$	9,208		$	1,165		$	10,373

The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2020 and determined there was no impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value of $16.8 million or 392% above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the fourth quarter of fiscal 2020. It is anticipated that the results of the test will not change when the test is complete.

The following table presents the gross carrying amount and accumulated amortization by each major asset class:

Other Intangible Assets	March 31, 2020
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	13,614	$	21,949
Patents		338		270		68
LED technology firmware, software		16,066		12,731		3,335
Trade name		2,658		801		1,857
Total Amortized Intangible Assets		54,625		27,416		27,209
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	27,416	$	30,631

Page 15

Other Intangible Assets	June 30, 2019
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	12,070	$	23,493
Patents		338		247		91
LED technology firmware, software		16,066		12,364		3,702
Trade name		2,658		719		1,939
Total Amortized Intangible Assets		54,625		25,400		29,225
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	25,400	$	32,647

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2020		2019		2020		2019
Amortization Expense of Other Intangible Assets	$	670	$	691	$	2,016	$	2,071

The Company expects to record annual amortization expense as follows:

(In thousands)
2020	$	2,687
2021	$	2,682
2022	$	2,459
2023	$	2,412
2024	$	2,412
After 2024	$	16,573

NOTE 8 - REVOLVING LINE OF CREDIT

In February 2019, the Company amended its secured line of credit to a $75 million facility from a $100 million facility in order to better match its financing needs with an appropriate borrowing capacity. The line of credit expires in the third quarter of fiscal 2022. Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate as periodically determined, or at the bank’s base lending rate, at the Company’s option. The increment over the LIBOR borrowing rate, as periodically determined, fluctuates between 125 and 250 basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will be 125 basis points for the fourth quarter of fiscal 2020. The fee on the unused balance of the $75 million committed line of credit is 20 basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge coverage ratio. As of March 31, 2020, there was $7.9 million borrowed against the line of credit, and $67.1 million was available as of that date. Based on the terms of the line of credit and the maturity date, the debt has been classified as long term.

The Company is in compliance with all of its loan covenants as of March 31, 2020.

NOTE 9 - CASH DIVIDENDS

The Company paid cash dividends of $3,958,000 and $3,882,000 in the nine months ended March 31, 2020 and 2019, respectively. Dividends on restricted stock units in the amount of $59,077 and $40,798 were accrued as of March 31, 2020 and 2019, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April 2020, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 12, 2020 to shareholders of record as of May 4, 2020. The indicated annual cash dividend rate is $0.20 per share.

Page 16

NOTE 10 – EQUITY COMPENSATION

In November 2019, the Company’s shareholders approved the 2019 Omnibus Award Plan (“2019 Omnibus Plan”). The purpose of the 2019 Omnibus Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The 2019 Omnibus Plan replaced the 2012 Stock Incentive Plan (“2012 Stock Plan”). The number of shares of common stock authorized for issuance under the 2019 Omnibus Plan is 2,650,000 which were combined with the remaining shares available under the 2012 Stock Plan. The number of shares reserved for issuance under the 2019 Omnibus Plan is 3,812,997, all of which are available for future grant or award as of March 31, 2020. The 2019 Omnibus Plan implements the use of a fungible share ratio that consumes 2.5 available shares for every full value share awarded by the Company as stock compensation. The 2019 Omnibus Plan allows for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, performance stock units, and other stock-based awards.

In the third quarter of fiscal 2020, the Company granted 150,000 inducement stock options with an exercise price of $6.51. In the first quarter of fiscal 2020, the Company granted 455,429 non-qualified serviced-based stock options with an exercise price of $3.83 and 199,310 Performance Stock Units and 81,917 Restricted Stock Units at a fair value of $3.83. Stock compensation expense was $(103,000) and $224,000 for the three months ended March 31, 2020 and 2019, respectively and $494,000 and $951,000 for the nine months ended March 31, 2020 and 2019, respectively.

NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended
(In thousands)	March 31
	2020		2019
Cash Payments:
Interest	$	889	$	1,669
Income taxes	$	8	$	3
Non-cash investing and financing activities
Issuance of common shares as compensation	$	225	$	265
Issuance of common shares to fund deferred compensation plan	$	296	$	257

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of March 31, 2020, there were no such standby letters of credit issued.

NOTE 13 – SEVERANCE COSTS

The activity in the Company’s accrued severance liability is as follows for the periods indicated:

	Nine Months			Nine Months			Fiscal Year
	Ended			Ended			Ended
	March 31,			March 31,			June 30,
(In thousands)	2020			2019			2019
Balance at beginning of period	$	1,134		$	1,772		$	1,772
Accrual of expense		73			534			560
Payments		(481	)		(956	)		(1,198	)
Balance at end of period	$	726		$	1,350		$	1,134

Of the total $726,000 severance reserve reported as of March 31, 2020, $612,000 has been classified as a current liability and will be paid out over the next twelve months. The remaining $114,000 has been classified as a long-term liability.

Page 17

NOTE 14 – RESTRUCTURING COSTS

In the first quarter of fiscal 2020, the Company sold its New Windsor, New York facility. The net proceeds from the sale were $12.3 million resulting in a gain of $4.8 million. Restructuring costs incurred in the first quarter of fiscal 2020 related to the closure of the New Windsor facility, which impacted both the Lighting and Graphics segment.

Restructuring costs incurred in the second quarter of fiscal 2020 related to the realignment of the Company’s manufacturing footprint at its Houston, Texas facility, which impacted the Graphics segment. The realignment occurred as the result of the movement of equipment related to the closure of the New Windsor facility along with preparations to receive additional equipment resulting from the relocation of the North Canton, Ohio facility.

In the third quarter of fiscal 2020, the Company sold its North Canton, Ohio facility. The net proceeds from the sale were $7.7 million resulting in a net gain of $3.7 million. Restructuring charges incurred in the third quarter of fiscal 2020 related to the relocation of the North Canton facility, which impacted the Graphics Segment. The Company will relocate the production at the North Canton facility to a smaller, leased facility in Akron, Ohio during the fourth quarter of fiscal 2020. The Company also incurred $451,000 of expense to write-down inventory which is not included in the tables below.

Total restructuring costs were $235,000 and $744,000 for the three and nine months ended March 31, 2020, respectively.

The following table presents information about restructuring costs for the periods indicated:

	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2020			2019		2020			2019
Severance benefits	$	-		$	263	$	-		$	484
Impairment of fixed assets and accelerated depreciation		-			-		49			228
Facility repairs		-			52		-			99
Gain on sale of facility		(3,741	)		-		(8,562	)		-
Exit costs		235			53		419			113
Manufacturing realignment costs		-			-		276			-
Total	$	(3,506	)	$	368	$	(7,818	)	$	924

The following table presents a roll forward of the beginning and ending liability balances related to the restructuring costs:

	Balance as of									Balance as of
	June 30,		Restructuring							March 31,
(In thousands)	2019		Expense		Payments			Adjustments		2020
Severance and termination benefits	$	236	$	-	$	(209	)	$	-	$	27
Other restructuring costs		-		695		(695	)		-	$	-
Total	$	236	$	695	$	(904	)	$	-	$	27

Page 18

NOTE 15 - LEASES

The Company leases certain manufacturing facilities along with a small office space, a company vehicle, several forklifts, several small tooling items, and various items of office equipment. All of the Company’s leases are operating leases and are included in other long-term assets with the corresponding liability in other long-term liabilities. Leases have a remaining term of 1 to 5 years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments.

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. For the three and nine months ended March 31, 2020, the rent expense for these leases is immaterial.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use assets (ROU assets) of $10.4 million and lease liabilities of $10.8 million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of July 1, 2019 for the Company’s real estate leases. The adoption of the new standard resulted in no material impact to the consolidated statements of operations or consolidated statements of cash flow.

	Three months ended		Nine months ended
(In thousands)	March 31, 2020		March 31, 2020
Operating lease cost	$	574	$	1,736

Supplemental Cash Flow Information:
	Nine months ended
(In thousands)	March 31, 2020
Operating cash flows from operating leases
Fixed payments		1,707
Liability reduction		1,334

Operating Leases:
	At March 31, 2020
Total operating right-of-use asset (Other long-term assets)		9,050
Accrued expenses (Current liabilities)		362
Long-term operating lease liability (Other long-term liabilities)		9,440
		9,802
Weighted Average remaining Lease Term (in years)		4.81
Weighted Average Discount Rate		4.85	%

Maturities of Lease Liability:
2020	955
2021	2,303
2022	2,279
2023	2,244
2024	1,917
Thereafter	1,683
Total lease payments	11,381
Less: Interest	(1,579	)
Present Value of Lease Liabilities	9,802

Page 19

NOTE 16 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in March 2020. The CARES Act allowed the Company to utilize a Net Operating Loss (NOL) Carryback resulting in a revaluation of its deferred tax assets creating a favorable impact of $0.3 million in the third quarter of fiscal 2020. In addition, the Company sold its North Canton, Ohio facility in the third quarter of fiscal 2020 resulting in a book gain of $3.7 million. The sale generated a capital gain during the quarter resulting in a tax benefit due to the utilization of a capital loss carryforward, which reduced the anticipated full year estimated effective income tax rate.

In the first quarter of fiscal 2020, the Company sold its New Windsor, New York facility resulting in a book gain of $4.8 million. The Company was able to utilize a deferred tax asset of $864,000 related to the sale of the facility.

In the second quarter of fiscal 2019, a deferred tax asset of $4.8 million was created as a result of the impairment of goodwill in the Lighting reporting unit.

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2020			2019			2020			2019
Reconciliation of effective tax rate:
Provision for income taxes at the anticipated annual tax rate		10.8	%		(0.7	)%		16.7	%		13.6	%
Uncertain tax positions		1.5			(0.1	)		(0.3	)		0.6
Deferred income tax adjustments		(16.7	)		-			(2.5	)		6.7
Shared-based compensation		4.4			(3.6	)		3.7			(0.9	)
Effective tax rate		-	%		(4.4	)%		17.6	%		20.0	%

Page 20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2019, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview; Recent Developments

LSI Industries is a leading producer of high-performance, American-made lighting solutions. Our strength in outdoor lighting applications creates opportunities for us to introduce additional solutions to our valued customers. LSI’s indoor and outdoor products and services, including our digital and print graphics capabilities, are valued by architects, engineers, distributors and contractors for their quality, reliability and innovation. Our products are used extensively in automotive dealerships, petroleum stations, quick service restaurants, grocery stores and pharmacies, retail establishments, sports complexes, parking lots and garages, and commercial and industrial buildings. 

Although we are aggressively managing our response to the recent COVID-19 pandemic primarily through our focus on employee safety, customer service and support and cost-effective business continuity, the pandemic’s impact on our full year fiscal 2020 results and beyond is uncertain. We believe that the most significant elements of uncertainty relate to the intensity and duration of the impact on construction, renovation, and consumer spending as well as the ability of our sales channels, supply chains, manufacturing, and distribution to continue to operate with minimal disruption for the remainder of fiscal 2020 and beyond, all of which could negatively impact our financial position, results of operations, cash flows, and outlook. While we remain fully operational at all manufacturing facilities and practice safe engagement with our customers, agents and suppliers, we are attempting to mitigate the possible impacts of the COVID-19 pandemic on our business by taking certain expense management actions. Also, even though we have not recently experienced any issues with our supply chains, we have taken steps to diversify our supply chains so that we are not dependent on a sole supplier for certain raw materials. Because the duration and resulting economic disruption of the COVID-19 pandemic are unknown and impossible to determine at this time, we are uncertain regarding the extent to which the COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity and capital investments.

Net Sales by Business Segment
	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2020		2019		2020		2019
Lighting Segment	$	49,013	$	52,785	$	165,640	$	177,871
Graphics Segment		21,997		20,047		76,448		69,459
	$	71,010	$	72,832	$	242,088	$	247,330

Operating Income (Loss) by Business Segment
	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2020			2019			2020			2019
Lighting Segment	$	1,102		$	691		$	13,411		$	(13,911	)
Graphics Segment		4,015			(898	)		6,394			2,350
Corporate and Eliminations		(2,486	)		(2,066	)		(8,575	)		(8,049	)
	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)

Page 21

Summary Comments

As we mentioned in the prior two quarters, we are transitioning from low margin commodity business to focus on higher margin applications and solutions, resulting in lower sales in the short term and improved margins.

Net sales of $71.0 million for the three months ended March 31, 2020 decreased $1.8 million or 3% as compared to net sales of $72.8 million for the three months ended March 31, 2019. Net sales were favorably influenced by increased net sales of the Graphics Segment (an increase of $1.9 million or 10%) more than offset by decreased net sales of the Lighting Segment (a decrease of $3.8 million or 7%).

Net sales of $242.1 million for the nine months ended March 31, 2020 decreased $5.2 million or 2% as compared to net sales of $247.3 million for the nine months ended March 31, 2019. Net sales were favorably influenced by increased net sales of the Graphics Segment (an increase of $7.0 million or 10%) more than offset by decreased net sales of the Lighting Segment (a decrease of $12.2 million or 7%).

Operating income of $2.6 million for the three months ended March 31, 2020 represents a $4.9 million improvement from operating loss of ($2.3) million in the three months ended March 31, 2019. The $4.9 million improvement from operating loss in fiscal 2019 was impacted by the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020 which favorably resulted in a pre-tax gain of $3.7 million. When the impact of the sale of the North Canton facility, other restructuring and other plant closure costs and severance are removed from the operating results, adjusted operating loss, a Non-GAAP measure, was ($0.4) million in the three months ended March 31, 2020 compared to ($1.9) million in the three months ended March 31, 2019. Refer to “Non-GAAP Financial Measures” below. The improvement in adjusted operating loss was the net result of higher value sales mix, lower selling and administrative expenses and cost savings from the closure of the New Windsor, New York facility.

Operating income of $11.2 million for the nine months ended March 31, 2020 represents a $30.8 million improvement from an operating loss of ($19.6) million in the nine months ended March 31, 2019. The $30.8 million improvement from operating loss in fiscal 2019 was impacted by the sale of the New Windsor, New York facility in the first quarter of fiscal 2020 which favorably resulted in a pre-tax gain of $4.8 million, the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020 which favorably resulted in a pre-tax gain of $3.7 million, and a pre-tax $20.2 million goodwill impairment charge in the second quarter of fiscal 2019 with no comparable event in fiscal 2020. The period-over-period improvement in operating income was partially offset by a one-time adjustment to a Company benefit plan in fiscal 2019 which resulted in a favorable pre-tax adjustment to earnings of $1.2 million. When the impact of the sales of the New Windsor and North Canton facilities, the goodwill impairment charge and other restructuring and plant closure costs are removed from the operating results, adjusted operating income, a Non-GAAP measure, was $3.9 million in the nine months ended March 31, 2020 compared to $3.2 million in the nine months ended March 31, 2019. Refer to “Non-GAAP Financial Measures” below. The increase in adjusted operating income was the net result of higher value sales mix, lower selling and administrative expenses and cost savings from the closure of the New Windsor, New York facility.

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Non-GAAP Financial Measures

We believe it is appropriate to evaluate our performance after making adjustments to the as-reported U.S. GAAP operating income, net income, and earnings per share. Adjusted operating income, net income and earnings per share, which exclude the impact of goodwill impairment, severance costs, transition and re-alignment costs, and restructuring and plant closure costs, are Non-GAAP financial measures. Also included below are Non-GAAP financial measures including Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Free Cash Flow and Net Debt. We believe that these adjusted supplemental measures are useful in assessing the operating performance of our business. These supplemental measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude these items because they are not representative of the ongoing results of operations of our business. Below is a reconciliation of these Non-GAAP measures to operating income, net income, and earnings per share for the periods indicated along with the calculation of EBIDTA and Adjusted EBITDA, Free Cash Flow and Net Debt.

Reconciliation of operating income (loss) to adjusted operating income (loss):
	Three Months Ended
	March 31
(In thousands)	2020			2019
Operating Income (Loss) as reported	$	2,631		$	(2,273	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(3,055	)		368
Severance costs		19			42
Adjusted Operating Loss	$	(405	)	$	(1,863	)

Reconciliation of net income (loss) to adjusted net income (loss)
	Three Months Ended
	March 31
(In thousands, except per share data)	2020							2019
					Diluted EPS							Diluted EPS
Net Income (Loss) as reported	$	1,861			$	0.07		$	(3,168	)		$	(0.12	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(2,769	)	(1)		(0.10	)		115		(3)		-
Severance costs		17		(2)		-			(14	)	(4)		-
Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes		(174	)			(0.01	)		897				0.03
Net Loss adjusted	$	(1,065	)		$	(0.04	)	$	(2,170	)		$	0.08

The income tax effects of the adjustments in the tables above were calculated using the estimated U.S. effective income tax rates for the periods indicated. The income tax effects were as follows (in thousands):

⁽¹⁾ ($286)

⁽²⁾ $2

⁽³⁾ $253

⁽⁴⁾ $56

Reconciliation of operating income (loss) to adjusted operating income:
	Nine Months Ended
	March 31
(In thousands)	2020			2019
Operating Income (Loss) as reported	$	11,230		$	(19,610	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(7,367	)		1,991
Severance costs		73			534
Goodwill impairment		-			20,165
Transition and re-alignment costs		-			120
Adjusted Operating Income	$	3,936		$	3,200

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Reconciliation of net income (loss) to adjusted net income
	Nine Months Ended
	March 31
(In thousands, except per share data)	2020							2019
					Diluted EPS							Diluted EPS
Net Income (Loss) as reported	$	8,079			$	0.31		$	(17,201	)		$	(0.66	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(5,995	)	(1)		(0.23	)		1,386		(3)		0.05
Severance costs		61		(2)		-			372		(4)		0.01
Goodwill impairment		-				-			15,361		(5)		0.59
Transition and re-alignment costs		-				-			94		(6)		-
Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes		(609	)			(0.02	)		897				0.03
Net Income adjusted	$	1,536			$	0.06		$	908			$	0.03

The reconciliation of reported net income (loss) and earnings (loss) per share to adjusted net income and earnings per share may not agree due to rounding differences and due to the difference between basic and dilutive weighted average shares outstanding in the computation of earnings per share.

The income tax effects of the adjustments in the tables above were calculated using the estimated U.S. effective income tax rates for the periods indicated. The income tax effects were as follows (in thousands):

⁽¹⁾ ($1,372)

⁽²⁾ $12

⁽³⁾ $605

⁽⁴⁾ $162

⁽⁵⁾ $4,804

⁽⁶⁾ $26

Reconciliation of operating income (loss) to EBITDA and Adjusted EBITDA
	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2020			2019			2020			2019
Operating Income (Loss) as reported	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)
Depreciation and Amortization		2,080			2,552			6,631			7,787
EBITDA	$	4,711		$	279		$	17,861		$	(11,823	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(3,055	)		368			(7,367	)		1,991
Severance costs		19			42			73			534
Goodwill impairment		-			-			-			20,165
Transition and re-alignment costs		-			-			-			120
Adjusted EBITDA	$	1,675		$	689		$	10,567		$	10,987

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Reconciliation of cash flow from operations to free cash flow
	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2020			2019			2020			2019
Cash Flow from Operations	$	(3,806	)	$	(1,243	)	$	17,097		$	6,385
Proceeds from sale of facilities		7,700			-			20,032			-
Capital expenditures		(419	)		(769	)		(1,538	)		(2,348	)
Free Cash Flow	$	3,475		$	(2,012	)	$	35,591		$	4,037

Reconciliation of Net Debt
	March 31,		June 30,
(In thousands)	2020		2019
Long-Term Debt as reported	$	7,919	$	39,541
Less:
Cash and cash equivalents as reported		820		966
Net Debt	$	7,099	$	38,575

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Results of Operations

THREE MONTHS ENDED MARCH 31, 2020 COMPARED TO THREE MONTHS ENDED MARCH 31, 2019

Lighting Segment
	Three Months Ended
	March 31
(In thousands)	2020		2019
Net Sales	$	49,013	$	52,785
Gross Profit	$	12,637	$	12,331
Operating Income (Loss)	$	1,102	$	691

Lighting Segment net sales of $49.0 million in the three months ended March 31, 2020 decreased 7% from net sales of $52.8 million in the same period in fiscal 2019. The 7% drop in sales is attributed to the continued transition toward a less commoditized, higher-value sales mix.

Gross profit of $12.6 million in the three months ended March 31, 2020 increased $0.3 million or 3% from the same period of fiscal 2019 and increased from 23.2% to 25.4% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales). The Lighting Segment incurred restructuring and plant closure costs that were recorded in cost of sales related to the closure of the New Windsor, New York facility $0.3 million in fiscal 2019. The increase in gross profit is also due to product mix and moving away from low-margin commodity business to higher margin market applications. Also contributing to the period-over-period improvement in gross profit are the cost savings from the closure of the New Windsor facility

Selling and administrative expenses of $11.5 million in the three months ended March 31, 2020 remained relatively flat from the same period of fiscal 2019.

Lighting Segment operating income of $1.1 million for the three months ended March 31, 2020 increased $0.4 million from operating income of $0.7 million in the same period of fiscal 2019 primarily due to restructuring and plant closure costs and severance related to the closure of its New Windsor facility in fiscal 2019.

Graphics Segment
	Three Months Ended
	March 31
(In thousands)	2020		2019
Net Sales	$	21,997	$	20,047
Gross Profit	$	3,293	$	3,018
Operating Income (Loss)	$	4,015	$	(898	)

Graphics Segment net sales of $22.0 million in the three months ended March 31, 2020 increased $1.9 million or 10% from net sales of $20.0 million in the same period in fiscal 2019. The increase in sales is from growth in sales to the Petroleum market vertical.

Gross profit of $3.3 million in the three months ended March 31, 2020 increased $0.3 million or 9% from the same period of fiscal 2019. Gross profit as a percentage of segment net sales (customer plus inter-segment net sales) for the three months ended March 31, 2020 remained relatively flat from the same period of fiscal 2019.

Selling and administrative expenses, which showed a gain of ($0.7) million in the three months ended March 31, 2020, improved $4.6 million from $3.9 million in the same period of fiscal 2019. The $4.6 million improvement was primarily as a result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020. When the $3.7 million gain is removed from the third quarter of fiscal 2020 results, there was a $0.9 million or 23% decrease in selling and administrative expenses. The decrease in selling and administrative expenses was due to decreased wages and benefit expense due to lower headcount and a reduction in bad debt expense.

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Graphics Segment operating income of $4.0 million in the three months ended March 31, 2020 increased $4.9 million from operating loss of ($0.9) million in the same period of fiscal 2019. The increase of $4.9 million was primarily the net result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility in the three months ended March 31, 2020. When all Non-GAAP items are removed from both fiscal years, Non-GAAP adjusted operating income for the three months ended March 31, 2020 was $1.0 million, or $1.9 million higher than Non-GAAP adjusted operating loss of ($0.9) million for the three months ended March 31, 2019 (refer to the Non-GAAP table below for a reconciliation of Graphics Segment operating income (loss) to adjusted operating income). The increase is due to the increase in sales and a decrease in selling and administrative expenses.

Reconciliation of Graphics Segment operating income (loss) to adjusted operating income (loss):
	Three Months Ended
	March 31
(In thousands)	2020			2019
Operating Income (Loss)	$	4,015		$	(898	)
Restructuring, plant closure (gain) costs and related inventory write-downs		(3,044	)		-
Severance		27			(9	)
Adjusted operating income (loss)	$	998		$	(907	)

Corporate and Eliminations 

	March 31
(In thousands)	2020			2019
Gross Profit (Loss)	$	12		$	(12	)
Operating (Loss)	$	(2,486	)	$	(2,066	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Administrative expenses of $2.5 million in the three months ended March 31, 2020 increased $0.4 million or 22% from the same period of fiscal 2019. The increase is primarily the result of filling key vacancies in selling and administration.

Consolidated Results

We reported $0.1 million net interest expense in the three months ended March 31, 2020 compared to $0.6 million net interest expense in the three months ended March 31, 2019. The decrease in interest expense from fiscal 2019 to fiscal 2020 is the result of lower levels of debt outstanding on our line of credit. We also recorded other expense of $0.6 million in the three months ended March 31, 2020 compared to $0.2 million in the three months ended March 31, 2019, both of which are related to net foreign exchange currency transaction losses through our Mexican subsidiary. The increase in other expense for the three months ended March 31, 2020 was due to the devaluation of the Mexican Peso as a result of market conditions surrounding the COVID-19 pandemic.

We recorded less than $1,000 of income tax expense in the three months ended March 31, 2020 which was driven by a favorable deferred tax asset adjustment related to a Net Operating Loss (NOL) carryback from the CARES Act. The $0.1 million income tax expense in the three months ended March 31, 2019 was the result of a cumulative change to our estimated annual tax rate driven by the expected gain on the sale of the New Windsor, New York facility.

We reported net income of $1.9 million in the three months ended March 31, 2020 compared to net loss of ($3.2) million in the same period of fiscal 2019. The improvement in the net loss in the three months ended March 31, 2019 to net income in the three months ended March 31, 2020 is mostly driven by the pre-tax gain of $3.7 million on the sale of the North Canton, Ohio facility. When the impact of all Non-GAAP items is removed from both fiscal years, Non-GAAP adjusted net loss was ($1.1) million for the three months ended March 31, 2020 compared to adjusted net loss of ($2.2) million for the three months ended March 31, 2019 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an improved gross profit margin, decreased interest expense, and a lower effective tax rate, partially offset by decreased net sales and higher foreign exchange currency transaction losses. Diluted earnings per share of $0.07 was reported in the three months ended March 31, 2020 as compared to ($0.12) diluted loss per share in the same period of fiscal 2019. The weighted average common shares outstanding for purposes of computing diluted earnings (loss) per share in the three months ended March 31, 2020 were 26,301,000 shares as compared to 26,132,000 shares in the same period last year.

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NINE MONTHS ENDED MARCH 31, 2020 COMPARED TO NINE MONTHS ENDED MARCH 31, 2019

Lighting Segment
	Nine Months Ended
	March 31
(In thousands)	2020		2019
Net Sales	$	165,640	$	177,871
Gross Profit	$	45,357	$	42,548
Operating Income (Loss)	$	13,411	$	(13,911	)

Lighting Segment net sales of $165.6 million in the nine months ended March 31, 2020 decreased 7% from net sales of $177.9 million in the same period in fiscal 2019. The reduction in sales is attributed to the continued transition toward a less commoditized, higher-value sales mix and the softness in select vertical markets.

Gross profit of $45.4 million in the nine months ended March 31, 2020 increased $2.8 million or 7% from the same period of fiscal 2019 and increased from 23.7% to 27.0% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales). The growth in gross profit and gross profit as a percentage of sales is due to continued favorable price/mix. Also contributing to the period-over-period improvement in gross profit are the cost savings from the closure of the New Windsor facility.

Selling and administrative expenses of $31.9 million in the nine months ended March 31, 2020 decreased $24.5 million from selling and administrative expenses of $56.5 million in the same period in fiscal 2019, primarily due to the $4.8 million pre-tax gain on the sale of the New Windsor, New York facility in fiscal 2020 and the $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When the $4.8 million gain is removed from fiscal 2020 results and the goodwill impairment charge is removed from fiscal 2019 results, there was a $0.5 million or 1% increase in selling and administrative expenses. The increase in selling and administrative expenses is mostly driven by a one-time adjustment to a Company benefit plan in fiscal 2019 with no comparable event in fiscal 2020 partially offset by lower commission expense in fiscal 2020 which is the result of lower sales volume.

Lighting Segment operating income of $13.4 million in the nine months ended March 31, 2020 increased $27.3 million from an operating loss of ($13.9) million in the same period of fiscal 2019 primarily due to the $4.8 million pre-tax gain on the sale of the New Windsor, New York facility in fiscal 2020 and a $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When all Non-GAAP items are removed from both fiscal years, fiscal 2020 Non-GAAP adjusted operating income of $8.8 million was $0.3 million higher than fiscal 2019 Non-GAAP adjusted operating income of $8.5 million (refer to the Non-GAAP table below for a reconciliation of Lighting Segment operating income (loss) to adjusted operating income). The increase in Non-GAAP adjusted operating income is due to higher gross profit and improved gross profit as a percentage of sales partially offset by a decrease in sales volume and higher selling and administrative expenses.

Reconciliation of Lighting Segment operating income (loss) to adjusted operating income:
	Nine Months Ended
	March 31
(In thousands)	2020			2019
Operating Income (Loss)	$	13,411		$	(13,911	)
Restructuring and plant closure (gain) costs		(4,674	)		1,991
Severance		18			237
Goodwill impairment		-			20,165
Adjusted operating income	$	8,755		$	8,482

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Graphics Segment
	Nine Months Ended
	March 31
(In thousands)	2020		2019
Net Sales	$	76,448	$	69,459
Gross Profit	$	12,384	$	13,727
Operating Income	$	6,394	$	2,350

Graphics Segment net sales of $76.4 million in the nine months ended March 31, 2020 increased $7.0 million or 10% net sales of $69.5 million in the same period of fiscal 2019. Growth was realized across the petroleum and digital signage product applications.

Gross profit of $12.4 million in the nine months ended March 31, 2020 decreased $1.3 million or 10% from the same period of fiscal 2019. Gross profit as a percentage of segment net sales (customer plus inter-segment net sales) decreased from 19.7% in the nine months ended March 31, 2019 to 16.1% in the nine months ended March 31, 2020. The decrease in amount of gross profit is due to the net effect of increased net sales (customer plus inter-segment net sales) offset by a change in customer program mix. Graphics gross margin was unfavorably impacted by several factors including: new and early stage petroleum products and start-up costs associated therewith, alignment of manufacturing resources required to support the transition from print to digital in certain market applications, and a one-time adjustment to a Company benefit plan in fiscal 2019 with no comparable event in fiscal 2020.

Selling and administrative expenses of $6.0 million in the nine months ended March 31, 2020 decreased $5.4 million or 47% from the same period of fiscal 2019 primarily as a result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020. When the $3.7 million gain is removed from the third quarter of fiscal 2020 results, there was a $1.6 million or 14% decrease in selling and administrative expenses. The decrease in selling and administrative expenses was due to decreased wages and benefit expense due to lower headcount and a reduction in bad debt expense.

Graphics Segment operating income of $6.4 million in the nine months ended March 31, 2020 increased $4.0 million from operating income of $2.4 million in the same period of fiscal 2019. The increase of $4.0 million was primarily the result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility.

Corporate and Eliminations
	Nine Months Ended
	March 31
(In thousands)	2020			2019
Gross Profit (Loss)	$	20		$	(21	)
Operating (Loss)	$	(8,575	)	$	(8,049	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Administrative expenses of $8.6 million in the nine months ended March 31, 2020 increased $0.6 million from the same period of fiscal 2019. The increase is primarily the result of filling key vacancies in selling and administration.

Consolidated Results

We reported $0.8 million net interest expense in the nine months ended March 31, 2020 compared to $1.7 million net interest expense in the nine months ended March 31, 2019. The decrease in interest expense from fiscal 2019 to fiscal 2020 is primarily the result of reduced borrowings against our line of credit. We also recorded other expense of $0.6 million in the nine months ended March 31, 2020 compared $0.2 million in the nine months ended March 31, 2019, both of which are related to net foreign exchange currency transaction losses through our Mexican subsidiary. The increase in other expense for the three months ended March 31, 2020 was due to the devaluation of the Mexican Peso as a result of market conditions surrounding the COVID-19 pandemic.

Page 29

The $1.7 million income tax expense in the nine months ended March 31, 2020 represents a consolidated effective tax rate of 17.6%. The effective tax rate is mostly driven by the following: 1) a discrete item related to stock-based compensation expense; 2) a deferred tax asset adjustment related to a NOL carryback from the CARES Act, and; 3) the utilization of a capital loss carryforward related to the capital gain on the sale of the North Canton, Ohio facility. The $4.3 million income tax benefit in the nine months ended March 31, 2019 represents a consolidated effective tax rate of 20.0%, which is inclusive of a cumulative change to the estimated annual tax rate mostly due to the tax treated related to the fourth quarter of fiscal 2019 sale of the New Windsor, New York facility. Also impacting the consolidated tax benefit in the first nine months of fiscal 2019 is the second quarter goodwill impairment charge.

We reported net income of $8.1 million in the nine months ended March 31, 2020 compared to net loss of ($17.2) million in the same period of fiscal 2019. The change from the net loss in the nine months ended March 31, 2019 to the net income in the nine months ended March 31, 2020 is driven by the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility and the $4.8 million pre-tax gain on the sale of the New Windsor, New York facility in fiscal 2020 and the $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When the impact of all Non-GAAP items is removed from both fiscal years, the fiscal 2020 Non-GAAP adjusted net income of $1.5 million increased $0.6 million from fiscal 2019 adjusted net income of $0.9 million (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an improved gross profit margin, decreased interest expense, and a lower effective tax rate, partially offset by decreased net sales and higher foreign exchange currency transaction losses. Diluted earnings per share of $0.31 was reported in the nine months ended March 31, 2020 as compared to ($0.66) diluted loss per share in the same period of fiscal 2019. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, 2020 were 26,423,000 shares as compared to 26,083,000 shares in the same period of fiscal 2019.

Liquidity and Capital Resources 

We consider our level of cash on hand, borrowing capacity, current ratio and working capital levels to be our most important measures of short-term liquidity. For long-term liquidity indicators, we believe our ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.

At March 31, 2020, we had working capital of $56.4 million, compared to $71.1 million at June 30, 2019. The ratio of current assets to current liabilities was 2.45 to 1 as compared to a ratio of 2.78 to 1 at June 30, 2019. The balance sheet at June 30, 2019 included an asset held for sale of $7.5 million which was sold in the first quarter of fiscal 2020. When June 30, 2019 current assets are revised to exclude the asset held for sale, adjusted working capital, a Non-GAAP financial measure, and the ratio of current assets to current liability are $63.6 million and 2.59 to 1, respectively, as of June 30, 2019. The $7.2 million decrease in working capital from June 30, 2019 to March 31, 2020 (as adjusted and excludes held for sale assets) is primarily driven by an $8.8 million decrease in accounts receivable, a $1.1 million decrease in accrued expense and a $0.9 million increase in refundable income taxes.

We generated $17.1 million of cash from operating activities in the nine months ended March 31, 2020 as compared to $6.4 million in the same period of fiscal 2019. This $10.7 million increase in net cash flows from operating activities is the result of our improved earnings as well as our ongoing strategy to aggressively manage our working capital which includes the reduction of accounts receivable days sales outstanding (DSO), increasing inventory turns while simultaneously reducing inventory levels, and effectively managing our supply chain which includes partnering with our suppliers to find the appropriate service level while effectively managing payment terms.

Net accounts receivable were $46.0 million and $54.7 million at March 31, 2020 and June 30, 2019, respectively. DSO decreased to 59 days at March 31, 2020 from 63 days at June 30, 2019. We believe that our receivables are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for doubtful accounts are adequate.

Net inventories of $43.6 million at March 31, 2020 increased $0.1 million from $43.5 million at June 30, 2019. The decrease of $0.1 million is the result of a decrease in gross inventory of $0.9 million and a decrease in obsolescence reserves of $1.0 million. Based on a strategy of balancing inventory reductions with customer service and the timing of shipments, net inventory increased $1.7 million in the first nine months of fiscal 2020 in the Lighting Segment which was partially offset by a decrease in net inventory in the Graphics Segment of $1.6 million. We increased inventory in the Lighting Segment in anticipation for higher demand during the coming summer months.

Cash generated from operations and borrowing capacity under our line of credit is our primary source of liquidity. We have a secured $75 million revolving line of credit with our bank, with $63.7 million of the credit line available as of April 17, 2020. This line of credit is a $75 million five-year credit line expiring in the third quarter of fiscal 2022. We are in compliance with all of our loan covenants. We believe that our $75 million line of credit plus cash flows from operating activities are adequate for calendar year 2020 operational and capital expenditure needs. However, as the impact of COVID-19 on the economy and our operations evolves, we will continue to assess our liquidity needs.

Page 30

We had a source of cash of $18.5 million related to investing activities in the nine months ended March 31, 2020 as compared to a use of $2.3 million in the same period of fiscal 2019, resulting in a favorable change of $20.8 million. Capital expenditures decreased from $2.3 million in the nine months ended March 31, 2019 to $1.5 million in the nine months ended March 31, 2020. We sold our New Windsor, New York manufacturing facility for $12.3 million in the first quarter of fiscal 2020 and our North Canton, Ohio facility for $7.7 million in the third quarter of fiscal 2020, which were the primary contributing factors to the increase in cash flow from investing activities from fiscal 2019 to fiscal 2020.

We used $35.5 million of cash related to financing activities in the nine months ended March 31, 2020 compared to $5.5 million in the nine months ended March 31, 2019. The $30.0 million change in cash flow was primarily the net result of payments of long-term debt in excess of borrowings which was primarily driven by cash flow from operations.

We have on our balance sheet financial instruments consisting primarily of cash and cash equivalents, short-term investments, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.

Off-Balance Sheet Arrangements

We have no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.

Cash Dividends

In April 2020, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 12, 2020 to shareholders of record as of May 4, 2020. The indicated annual cash dividend rate for fiscal 2020 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

Critical Accounting Policies and Estimates

A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2019 Annual Report on Form 10-K.

Page 31

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except for the broad effects of the COVID-19 pandemic as a result of its negative impact on the global economy and major financial markets, there have been no material changes in our exposure to market risk since June 30, 2019. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 13 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2020, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control

During the nine months ended March 31, 2020, we enacted additional controls related to the adoption of ASU 2016-02, “Leases.” There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 32

PART II.  OTHER INFORMATION

ITEM 1A.  RISK FACTORS

There have been no material changes from risk factors as previously disclosed in the Company’s fiscal 2019 Annual Report on Form 10-K in response to Item 1A to Part I of Form 10-K, except that we are adding the following risk factor discussion relating to the coronavirus (COVID-19) pandemic.

The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.

The World Health Organization has declared the COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our products and services. The COVID-19 pandemic and similar issues in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. Several public health organizations have recommended, and many local governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place and social distancing ordinances. Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential border closures, disruptions to the businesses of our channel partners, and others. Our suppliers and customers may also face these and other challenges, which could lead to a disruption in our supply chain as well as decreased construction and renovation spending and consumer demand for our products and services.

A continued worldwide disruption could materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate action. Although the disruptions related to COVID-19 may continue to occur, the long-term economic impact and near-term financial impacts of the COVID-19 pandemic, including but not limited to, possible impairment, restructuring, and other charges, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments. Because the duration and resulting economic disruption of the COVID-19 pandemic are unknown and impossible to determine at this time, we are uncertain regarding the extent to which the COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity and capital investments.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Effective February 4, 2020, the Compensation Committee of the Board of Directors granted inducement awards of stock options in accordance with NASDAQ Listing Rule 5635(c)(4) to Jeffrey Davis, the head of LSI sales and Brian Vincent, Chief Support Officer. Mr. Davis was granted an inducement stock option to purchase up to 100,000 shares of the Company’s common stock. The award was approved in connection with the commencement of his employment with the Company and has a ten-year term. The option is exercisable at a price of $6.51 per share (the closing price on February 4, 2020) and will vest only if Mr. Davis remains an employee of the Company for three years. Mr. Vincent was granted an inducement stock option to purchase up to 50,000 shares of the Company’s common stock in connection with the commencement of his employment with the Company and has a ten-year term. The option is exercisable at a price of $6.51 per share (the closing price on February 4, 2020), and one-third of the option will vest on each anniversary of the grant date. The grants of such awards are exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended and/or Rule 701 promulgated pursuant to the Securities Act of 1933, as amended.

Page 33

ITEM 6.  EXHIBITS

Exhibits:

31.1 Certification of Principal Executive Officer required by Rule 13a-14(a)

31.2 Certification of Principal Financial Officer required by Rule 13a-14(a)

32.1 Section 1350 Certification of Principal Executive Officer

32.2 Section 1350 Certification of Principal Financial Officer

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Page 34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LSI Industries Inc.
	By:	/s/ James A. Clark
		James A. Clark
		Chief Executive Officer and President
		(Principal Executive Officer)
	By:	/s/ James E. Galeese
		James E. Galeese
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
May 5, 2020

Page 35

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Rule 13a-14(a)

I, James A. Clark, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 5, 2020	/s/ James A. Clark
	Principal Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer

Pursuant to Rule 13a-14(a)

I, James E. Galeese, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 5, 2020	/s/ James E. Galeese
	Principal Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF JAMES A. CLARK

Pursuant to Section 1350 of Chapter 63 of the

United States Code and Rule 13a-14b

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 (the “Report”), I, James A. Clark, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James A. Clark

James A. Clark

Chief Executive Officer and President

Date: May 5, 2020

A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF JAMES E. GALEESE

Pursuant to Section 1350 of Chapter 63 of the

United States Code and Rule 13a-14b

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 (the “Report”), I, James E. Galeese, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James E. Galeese

James E. Galeese

Executive Vice President and Chief Financial Officer

Date:  May 5, 2020

A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2

 - SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

A summary of the Company’s significant accounting policies is included in Note

1

to the audited consolidated financial statements of the Company’s fiscal

2019

Annual Report on Form

10

-K. Significant changes to our accounting policies as a result of adopting ASU-

2014

-

09

“Revenue from Contracts with Customers” (Topic

606

) in the

first

quarter of fiscal

2019

and adopting ASU

2016

-

02,

“Leases” in the

first

quarter of fiscal

2020

are discussed below.

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within

30

to

90

days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do

not

represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is

not

a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is

not

always responsible for installation of products it sells and has

no

post-installation responsibilities other than standard warranties.

A number of the Company's Graphics and select lighting products are highly customized for specific customers. As a result, these customized products do

not

have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does

not

accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is

no

alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore, recognizes revenue over time. The customized product types are as follows:

● Customer specific print graphics branding

● Electrical components based on customer specifications

● Digital signage and related media content

The Company also offers installation services for its Graphics and select lighting products. Installation revenue is recognized over time as our customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the contract.

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table presents a reconciliation of the disaggregation by reportable segments.

	Three Months Ended				Nine Months Ended
(In thousands)	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	43,222	$	15,093	$	147,260	$	50,339
Products and services transferred over time		5,791		6,904		18,380		26,109
	$	49,013	$	21,997	$	165,640	$	76,448

	Three Months Ended				Nine Months Ended
	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	42,536	$	2,234	$	143,615	$	13,515
Legacy products		5,949		14,444		20,252		47,155
Turnkey services and other		528		5,319		1,773		15,778
	$	49,013	$	21,997	$	165,640	$	76,448

Legacy products include lighting fixtures utilizing light sources other than LED technology and printed

two

- and

three

-dimensional graphic products. Turnkey services and other includes project management and installation services along with shipping and handling charges.

Practical Expedients and Exemptions

● The Company’s contracts with customers have an expected duration of one year or less, as such the Company applies the practical expedient to expense sales commissions as incurred, and have omitted disclosures on the amount of remaining performance obligations.

● Shipping costs that are not material in context of the delivery of products are expensed as incurred.

● The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing, therefore, payments do not contain significant financing components.

● The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

New Accounting Pronouncements:

On

July 1, 2018,

the Company adopted ASU

2014

-

09.

“Revenue from Contracts with Customers,” (Topic

606

) using the modified retrospective adoption method which requires a cumulative effect adjustment to the opening balance of retained earnings. This approach was applied to contracts that were

not

completed as of

June 30, 2018.

Results for reporting periods beginning

July 1, 2018

are presented under Topic

606,

while prior period amounts are

not

adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net increase to beginning retained earnings of

$591,000

on

July 1, 2018

due to the cumulative impact of adopting Topic

606,

as described below.

ASC 606 Cumulative Impact
(in thousands)	Balance as of					Balance as of
	June 30, 2018		Adjustments			July 1, 2018
Assets:
Accounts receivable, net	$	50,609	$	4,935		$	55,544
Inventories, net	$	50,994	$	(4,167	)	$	46,827
Other long-term assets, net	$	9,786	$	(177	)	$	9,609
Shareholder's Equity:
Retained earnings	$	15,124	$	591		$	15,715

In

February 2016,

the Financial Accounting Standards Board issued ASU

2016

-

02,

“Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal and interim periods within those years, beginning after

December 15, 2018,

or the Company’s fiscal

2020,

with early adoption permitted. The Company adopted this guidance effective

July 1, 2019

using a modified-retrospective transition method, under which it elected

not

to adjust comparative periods. The Company elected the package of practical expedients permitted under the new guidance to

not

reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. In addition, the Company elected the practical expedient to

not

separate lease and non-lease component and the accounting policy election to

not

present leases with an initial term of

twelve

months or less on the balance sheet.

The Company’s most significant leases are those relating to certain manufacturing facilities along with a small office space. Besides these real estate leases, most other leases are insignificant and consist of leases related to a vehicle, forklifts, small tooling, and various office equipment. All of the Company’s leases are operating leases and are included in other long-term assets with the corresponding liability in other long-term liabilities. Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use assets (ROU assets) of

$10.4

million and lease liabilities of

$10.8

million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of

July 1, 2019

for the Company’s real estate leases. The adoption of the standard resulted in

no

material impact to consolidated statements of operations or consolidated statements of cash flow. (Refer to Note

15

)

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed.  

No

items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements other than noted below.

In

December 2019,

a novel coronavirus disease (“COVID-

19”

) was reported and in

January 2020,

the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On

February 28, 2020,

the WHO raised its assessment of the COVID-

19

threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on

March 11, 2020,

the WHO characterized COVID-

19

as a pandemic.

As of the date of this filing, the Company’s locations and primary suppliers continue to be operating. However, the broader implications of COVID-

19

on the Company’s results of operations and overall financial performance remain uncertain. The Company

may

experience constrained supply or slowed customer demand that could materially impact its business, results of operations and overall financial performance in future periods. See

Risk Factors

in Part II, Item

1A

of this Form

10

-Qfor further discussion of the possible impact of the COVID-

19

pandemic on the Company’s business

.

XML

Note 6 - Accrued Expenses

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

NOTE

6

 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2020		2019
Accrued Expenses:
Compensation and benefits	$	5,095	$	5,319
Customer prepayments		1,443		1,768
Accrued sales commissions		1,556		1,301
Accrued warranty		7,464		7,687
Other accrued expenses		4,548		5,136
Total Accrued Expenses	$	20,106	$	21,211

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities
Net income (loss)	$ 8,079	$ (17,201)
Non-cash items included in net income (loss)
Depreciation and amortization	6,631	7,787
Deferred income taxes	2,637	(4,077)
Impairment of goodwill		20,165
Deferred compensation plan	296	264
Stock compensation expense	494	951
Issuance of common shares as compensation	225	265
Gain on disposition of fixed assets	(8,510)	(22)
Allowance for doubtful accounts	(105)	505
Inventory obsolescence reserve	1,720	2,574
Changes in certain assets and liabilities
Accounts receivable	8,322	2,902
Inventories	(1,981)	(7,368)
Refundable income taxes	(1,170)	323
Accounts payable	1,015	2,705
Accrued expenses and other	(258)	(4,373)
Customer prepayments	(298)	985
Net cash flows provided by operating activities	17,097	6,385
Cash Flows from Investing Activities
Proceeds from the sale of assets	20,040
Purchases of property, plant and equipment	(1,538)	(2,348)
Net cash flows provided by (used in) investing activities	18,502	(2,348)
Cash Flows from Financing Activities
Payments of long-term debt	(169,671)	(89,489)
Borrowings of long-term debt	138,049	87,941
Cash dividends paid	(3,958)	(3,882)
Shares withheld for employees' taxes	(124)	(99)
Proceeds from stock option exercises	174
Net cash flows used in financing activities	(35,530)	(5,529)
Change related to foreign currency	(215)
Decrease in cash and cash equivalents	(146)	(1,492)
Cash and cash equivalents at beginning of period	966	3,178
Cash and cash equivalents at end of period	$ 820	$ 1,686

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Current assets
Cash and cash equivalents	$ 820	$ 966
Accounts receivable, less allowance for doubtful accounts of $267 and $879, respectively	45,957	54,728
Inventories	43,597	43,512
Refundable income tax	1,807	882
Asset held for sale		7,512
Other current assets	3,106	3,380
Total current assets	95,287	110,980
Property, Plant and Equipment, at cost
Land	3,933	4,576
Buildings	20,215	27,015
Machinery and equipment	70,733	73,185
Construction in progress	803	455
Property, Plant and Equipment, Gross, Ending Balance	95,684	105,231
Less accumulated depreciation	(70,981)	(73,255)
Net property, plant and equipment	24,703	31,976
Goodwill	10,373	10,373
Other Intangible Assets, net	30,631	32,647
Other Long-Term Assets, net	21,238	15,124
Total assets	182,232	201,100
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable	18,772	18,664
Accrued expenses	20,106	21,211
Total current liabilities	38,878	39,875
Long-Term Debt	7,919	39,541
Other Long-Term Liabilities	10,728	1,747
Commitments and Contingencies (Note 12)
Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued
Common shares, without par value; Authorized 40,000,000 shares; Outstanding 26,162,209 and 25,967,275 shares, respectively	126,918	125,729
Treasury shares, without par value	(1,057)	(1,468)
Deferred compensation plan	1,055	1,468
Retained (loss)	(2,115)	(5,808)
Accumulated other comprehensive (loss) income	(94)	16
Total shareholders' equity	124,707	119,937
Total liabilities & shareholders' equity	$ 182,232	$ 201,100

XML

Note 10 - Equity Compensation

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

10

 – EQUITY COMPENSATION

In

November 2019,

the Company’s shareholders approved the

2019

Omnibus Award Plan (

“2019

Omnibus Plan”). The purpose of the

2019

Omnibus Plan is to provide a means through which the Company

may

attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The

2019

Omnibus Plan replaced the

2012

Stock Incentive Plan (

“2012

Stock Plan”). The number of shares of common stock authorized for issuance under the

2019

Omnibus Plan is

2,650,000

which were combined with the remaining shares available under the

2012

Stock Plan. The number of shares reserved for issuance under the

2019

Omnibus Plan is

3,812,997,

all of which are available for future grant or award as of

March 31, 2020.

The

2019

Omnibus Plan implements the use of a fungible share ratio that consumes

2.5

available shares for every full value share awarded by the Company as stock compensation. The

2019

Omnibus Plan allows for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, performance stock units, and other stock-based awards.

In the

third

quarter of fiscal

2020,

the Company granted

150,000

inducement stock options with an exercise price of

$6.51.

In the

first

quarter of fiscal

2020,

the Company granted

455,429

non-qualified serviced-based stock options with an exercise price of

$3.83

and

199,310

Performance Stock Units and

81,917

Restricted Stock Units at a fair value of

$3.83

.

Stock compensation expense was $(

103,000

) and

$224,000

for the

three

months ended

March 31, 2020

and

2019,

respectively and

$494,000

and

$951,000

for the

nine

months ended

March 31, 2020

and

2019,

respectively.

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	Mar. 31, 2020	Jul. 01, 2019	Jun. 30, 2019	Mar. 31, 2019	Jul. 01, 2018	Jun. 30, 2018
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ 124,707,000		$ 119,937,000	$ 120,239,000		$ 139,251,000
Operating Lease, Right-of-Use Asset	9,050,000
Operating Lease, Liability, Total	9,802,000
Retained Earnings [Member]
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ (2,115,000)		(5,808,000)	$ (5,368,000)		15,124,000
Cumulative Effect, Period of Adoption, Adjustment [Member]
Cumulative Effect on Retained Earnings, Net of Tax, Total			(428,000)			591,000
Cumulative Effect, Period of Adoption, Adjustment [Member] | Retained Earnings [Member]
Cumulative Effect on Retained Earnings, Net of Tax, Total			$ (428,000)			$ 591,000
Accounting Standards Update 2014-09 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Retained Earnings [Member]
Cumulative Effect on Retained Earnings, Net of Tax, Total					$ 591,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		$ 10,400,000
Operating Lease, Liability, Total		$ 10,800,000

XML

Note 13 - Severance Costs (Tables)

9 Months Ended

Mar. 31, 2020

Employee Severance [Member]

Notes Tables

Schedule of Accrued Severance Liability [Table Text Block]

	Nine Months			Nine Months			Fiscal Year
	Ended			Ended			Ended
	March 31,			March 31,			June 30,
(In thousands)	2020			2019			2019
Balance at beginning of period	$	1,134		$	1,772		$	1,772
Accrual of expense		73			534			560
Payments		(481	)		(956	)		(1,198	)
Balance at end of period	$	726		$	1,350		$	1,134

XML

Note 8 - Revolving Line of Credit (Details Textual) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Feb. 28, 2019	Mar. 31, 2020	Feb. 27, 2019
Long-term Line of Credit, Total		$ 7.9
Line of Credit Facility, Remaining Borrowing Capacity		$ 67.1
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		1.25%
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%
UNITED STATES
Line of Credit Facility, Maximum Borrowing Capacity	$ 75.0		$ 100.0
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage		0.20%

XML

Note 12 - Commitments and Contingencies (Details Textual) $ in Thousands	Mar. 31, 2020 USD ($)
Standby Letters of Credit [Member]
Letters of Credit Outstanding, Amount	$ 0

XML

Note 7 - Goodwill and Other Intangible Assets (Details Textual) $ in Thousands		9 Months Ended
	Mar. 01, 2020 USD ($)	Mar. 31, 2020
Number of Reporting Units		2
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	$ 0
Intangible Assets, Indefinite-lived, Amount of Fair Value in Excess of Carrying Amount	$ 16,800
Intangible Assets, Indefinite-lived, Percentage of Fair Value in Excess of Carrying Amount	392.00%
Lighting Segment [Member]
Number of Reporting Units		1
Good will Impairment Testing Value Above Carrying Value	$ 31,600
Good will Impairment Testing Percent Value Above Carrying Value	33.00%
Graphics Segment [Member]
Number of Reporting Units		1
Good will Impairment Testing Value Above Carrying Value	$ 4,700
Good will Impairment Testing Percent Value Above Carrying Value	619.00%

XML

Note 3 - Segment Reporting Information - Intersegment Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Inter-segment Revenues	$ 71,010	$ 72,832	$ 242,088	$ 247,330
Lighting Segment [Member]
Inter-segment Revenues	49,013	52,785	165,640	177,871
Graphics Segment [Member]
Inter-segment Revenues	21,997	20,047	76,448	69,459
Intersegment Eliminations [Member] | Lighting Segment [Member]
Inter-segment Revenues	744	479	2,415	1,758
Intersegment Eliminations [Member] | Graphics Segment [Member]
Inter-segment Revenues	$ 153	$ 96	$ 251	$ 171

XML

Note 14 - Restructuring Costs - Summary of Restructuring Costs for the Period (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Severance benefits		$ 263		$ 484
Impairment of fixed assets and accelerated depreciation			49	228
Facility repairs		52		99
Gain on sale of facility	(3,741)		(8,562)
Exit costs	235	53	419	113
Manufacturing realignment costs			276
Total	$ (3,506)	$ 368	$ (7,818)	$ 924

XML

Note 15 - Leases - Maturities of Lease Liability (Details) $ in Thousands	Mar. 31, 2020 USD ($)
2020	$ 955
2021	2,303
2022	2,279
2023	2,244
2024	1,917
Thereafter	1,683
Total lease payments	11,381
Less: Interest	(1,579)
Present Value of Lease Liabilities	$ 9,802

XML

Note 14 - Restructuring Costs

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

NOTE

1

4

– RESTRUCTURING COSTS

In the

first

quarter of fiscal

2020,

the Company sold its New Windsor, New York facility. The net proceeds from the sale were

$12.3

million resulting in a gain of

$4.8

million. Restructuring costs incurred in the

first

quarter of fiscal

2020

related to the closure of the New Windsor facility, which impacted both the Lighting and Graphics segment.

Restructuring costs incurred in the

second

quarter of fiscal

2020

related to the realignment of the Company’s manufacturing footprint at its Houston, Texas facility, which impacted the Graphics segment. The realignment occurred as the result of the movement of equipment related to the closure of the New Windsor facility along with preparations to receive additional equipment resulting from the relocation of the North Canton, Ohio facility.

In the

third

quarter of fiscal

2020,

the Company sold its North Canton, Ohio facility. The net proceeds from the sale were

$7.7

million resulting in a net gain of

$3.7

million. Restructuring charges incurred in the

third

quarter of fiscal

2020

related to the relocation of the North Canton facility, which impacted the Graphics Segment. The Company will relocate the production at the North Canton facility to a smaller, leased facility in Akron, Ohio during the

fourth

quarter of fiscal

2020.

The Company also incurred

$451,000

of expense to write-down inventory which is

not

included in the tables below.

Total restructuring costs were

$235,000

and

$744,000

for the

three

and

nine

months ended

March 31, 2020,

respectively.

The following table presents information about restructuring costs for the periods indicated:

	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2020			2019		2020			2019
Severance benefits	$	-		$	263	$	-		$	484
Impairment of fixed assets and accelerated depreciation		-			-		49			228
Facility repairs		-			52		-			99
Gain on sale of facility		(3,741	)		-		(8,562	)		-
Exit costs		235			53		419			113
Manufacturing realignment costs		-			-		276			-
Total	$	(3,506	)	$	368	$	(7,818	)	$	924

The following table presents a roll forward of the beginning and ending liability balances related to the restructuring costs:

	Balance as of									Balance as of
	June 30,		Restructuring							March 31,
(In thousands)	2019		Expense		Payments			Adjustments		2020
Severance and termination benefits	$	236	$	-	$	(209	)	$	-	$	27
Other restructuring costs		-		695		(695	)		-	$	-
Total	$	236	$	695	$	(904	)	$	-	$	27

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended				Nine Months Ended
(In thousands)	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	43,222	$	15,093	$	147,260	$	50,339
Products and services transferred over time		5,791		6,904		18,380		26,109
	$	49,013	$	21,997	$	165,640	$	76,448

	Three Months Ended				Nine Months Ended
	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	42,536	$	2,234	$	143,615	$	13,515
Legacy products		5,949		14,444		20,252		47,155
Turnkey services and other		528		5,319		1,773		15,778
	$	49,013	$	21,997	$	165,640	$	76,448

Accounting Standards Update and Change in Accounting Principle [Table Text Block]

ASC 606 Cumulative Impact
(in thousands)	Balance as of					Balance as of
	June 30, 2018		Adjustments			July 1, 2018
Assets:
Accounts receivable, net	$	50,609	$	4,935		$	55,544
Inventories, net	$	50,994	$	(4,167	)	$	46,827
Other long-term assets, net	$	9,786	$	(177	)	$	9,609
Shareholder's Equity:
Retained earnings	$	15,124	$	591		$	15,715

XML

Note 6 - Accrued Expenses - Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Accrued Expenses:
Compensation and benefits	$ 5,095	$ 5,319
Customer prepayments	1,443	1,768
Accrued sales commissions	1,556	1,301
Accrued warranty	7,464	7,687
Other accrued expenses	4,548	5,136
Total Accrued Expenses	$ 20,106	$ 21,211

XML

Note 3 - Segment Reporting Information - Identifiable Assets by Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Identifiable assets	$ 182,232	$ 201,100
Corporate and Eliminations [Member]
Identifiable assets	16,649	18,081
Lighting Segment [Member] | Operating Segments [Member]
Identifiable assets	130,370	142,105
Graphics Segment [Member] | Operating Segments [Member]
Identifiable assets	$ 35,213	$ 40,914

XML

Note 14 - Restructuring Costs - Liability Balances Related to Restructuring Costs (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2020 USD ($)
Balance, beginning	$ 236
Restructuring Expense	695
Payments	(904)
Adjustments	0
Balance, ending	27
Severance and Other Termination Benefits [Member]
Balance, beginning	236
Restructuring Expense
Payments	(209)
Adjustments	0
Balance, ending	27
Other Restructuring [Member]
Balance, beginning	0
Restructuring Expense	695
Payments	(695)
Adjustments	0
Balance, ending

XML

Note 16 - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Sep. 30, 2019	Dec. 31, 2019
Deferred Tax Assets, Operating Loss Carryforwards, Revaluation Due to CARES Act	$ 300,000
Deferred Tax Assets, Property, Plant and Equipment		$ 864,000
Deferred Tax Assets, Goodwill and Intangible Assets			$ 4,800,000
Sale of Manufacturing Facility in North Canton, Ohio [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total	$ 3,700,000
Sell Manufacturing Facility In New Windsor, New York [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total		$ 4,800,000

XML

Note 15 - Leases

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

15

- LEASES

The Company leases certain manufacturing facilities along with a small office space, a company vehicle, several forklifts, several small tooling items, and various items of office equipment. All of the Company’s leases are operating leases and are included in other long-term assets with the corresponding liability in other long-term liabilities. Leases have a remaining term of

1

to

5

years some of which have an option to renew. The Company does

not

assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do

not

contain any material residual guarantees or material variable lease payments.

The Company has periodically entered into short-term operating leases with an initial term of

twelve

months or less. The Company elected

not

to record these leases on the balance sheet. For the

three

and

nine

months ended

March 31, 2020,

the rent expense for these leases is immaterial.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use assets (ROU assets) of

$10.4

million and lease liabilities of

$10.8

million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of

July 1, 2019

for the Company’s real estate leases. The adoption of the new standard resulted in

no

material impact to the consolidated statements of operations or consolidated statements of cash flow.

	Three months ended		Nine months ended
(In thousands)	March 31, 2020		March 31, 2020
Operating lease cost	$	574	$	1,736

Supplemental Cash Flow Information:
	Nine months ended
(In thousands)	March 31, 2020
Operating cash flows from operating leases
Fixed payments		1,707
Liability reduction		1,334

Operating Leases:
	At March 31, 2020
Total operating right-of-use asset (Other long-term assets)		9,050
Accrued expenses (Current liabilities)		362
Long-term operating lease liability (Other long-term liabilities)		9,440
		9,802
Weighted Average remaining Lease Term (in years)		4.81
Weighted Average Discount Rate		4.85	%

Maturities of Lease Liability:
2020	955
2021	2,303
2022	2,279
2023	2,244
2024	1,917
Thereafter	1,683
Total lease payments	11,381
Less: Interest	(1,579	)
Present Value of Lease Liabilities	9,802

XML

Note 3 - Segment Reporting Information (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended						Nine Months Ended
(In thousands)	March 31						March 31
	2020			2019			2020			2019
Net Sales:
Lighting Segment	$	49,013		$	52,785		$	165,640		$	177,871
Graphics Segment		21,997			20,047			76,448			69,459
	$	71,010		$	72,832		$	242,088		$	247,330
Operating Income (Loss):
Lighting Segment	$	1,102		$	691		$	13,411		$	(13,911	)
Graphics Segment		4,015			(898	)		6,394			2,350
Corporate and Eliminations		(2,486	)		(2,066	)		(8,575	)		(8,049	)
	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)
Capital Expenditures:
Lighting Segment	$	126		$	769		$	1,013		$	1,633
Graphics Segment		234			-			279			515
Corporate and Eliminations		59			-			246			200
	$	419		$	769		$	1,538		$	2,348
Depreciation and Amortization:
Lighting Segment	$	1,650		$	1,925		$	5,089		$	5,867
Graphics Segment		347			391			1,107			1,183
Corporate and Eliminations		83			236			435			737
	$	2,080		$	2,552		$	6,631		$	7,787

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	March 31, 2020		June 30, 2019
Identifiable Assets:
Lighting Segment	$	130,370	$	142,105
Graphics Segment		35,213		40,914
Corporate and Eliminations		16,649		18,081
	$	182,232	$	201,100

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2020		2019		2020		2019
Lighting Segment inter-segment net sales	$	744	$	479	$	2,415	$	1,758
Graphics Segment inter-segment net sales	$	153	$	96	$	251	$	171

XML

Document And Entity Information - shares	9 Months Ended
	Mar. 31, 2020	Apr. 27, 2020
Document Information [Line Items]
Entity Registrant Name	LSI INDUSTRIES INC
Entity Central Index Key	0000763532
Trading Symbol	lyts
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		26,192,949
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock, no par value

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Allowance for doubtful accounts	$ 267	$ 879
Preferred shares, par value (in dollars per share)	$ 0	$ 0
Preferred shares, authorized shares (in shares)	1,000,000	1,000,000
Preferred shares, issued (in shares)	0	0
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, authorized shares (in shares)	40,000,000	40,000,000
Common shares, outstanding (in shares)	26,162,209	25,967,275

XML

Note 11 - Supplemental Cash Flow Information

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE

1

1

 -

 SUPPLEMENTAL

CASH FLOW INFORMATION

	Nine Months Ended
(In thousands)	March 31
	2020		2019
Cash Payments:
Interest	$	889	$	1,669
Income taxes	$	8	$	3
Non-cash investing and financing activities
Issuance of common shares as compensation	$	225	$	265
Issuance of common shares to fund deferred compensation plan	$	296	$	257

XML

Note 3 - Segment Reporting Information

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

3

- SEGMENT REPORTING INFORMATION

 

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s

two

operating segments are Lighting and Graphics, with

one

executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes outdoor and indoor lighting utilizing both traditional and LED light sources that have been fabricated and assembled for the Company’s markets, primarily petroleum / convenience stores, automotive dealerships, quick-service restaurants, grocery and pharmacy store, and retail/national accounts. The Company also addresses lighting product customers through the commercial, industrial, stock and flow, and renovation channels. The Lighting Segment also includes the design, engineering, and manufacturing of electronic circuit boards, assemblies and sub-assemblies used to manufacture certain LED light fixtures and sold directly to customers.

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements such as traditional graphics, interior branding, electrical and architectural signage, active digital signage along with the management of media content related to digital signage, LED video screens, and menu board systems that are either digital or traditional by design. These products are used in visual image programs in several markets including, but

not

limited to the petroleum / convenience store market, multi-site retail operations, banking, and quick-service restaurants. The Graphics Segment implements, installs and provides program management services related to products sold by the Graphics Segment and by the Lighting Segment.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item.  These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit expenses, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There was

no

concentration of consolidated net sales in the

three

and

nine

months ended

March 31, 2020

and

2019.

  There was

no

concentration of accounts receivable at

March 31, 2020

or

June 30, 2019. 

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of

March 31, 2020

and

March 31, 2019:

	Three Months Ended						Nine Months Ended
(In thousands)	March 31						March 31
	2020			2019			2020			2019
Net Sales:
Lighting Segment	$	49,013		$	52,785		$	165,640		$	177,871
Graphics Segment		21,997			20,047			76,448			69,459
	$	71,010		$	72,832		$	242,088		$	247,330
Operating Income (Loss):
Lighting Segment	$	1,102		$	691		$	13,411		$	(13,911	)
Graphics Segment		4,015			(898	)		6,394			2,350
Corporate and Eliminations		(2,486	)		(2,066	)		(8,575	)		(8,049	)
	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)
Capital Expenditures:
Lighting Segment	$	126		$	769		$	1,013		$	1,633
Graphics Segment		234			-			279			515
Corporate and Eliminations		59			-			246			200
	$	419		$	769		$	1,538		$	2,348
Depreciation and Amortization:
Lighting Segment	$	1,650		$	1,925		$	5,089		$	5,867
Graphics Segment		347			391			1,107			1,183
Corporate and Eliminations		83			236			435			737
	$	2,080		$	2,552		$	6,631		$	7,787

	March 31, 2020		June 30, 2019
Identifiable Assets:
Lighting Segment	$	130,370	$	142,105
Graphics Segment		35,213		40,914
Corporate and Eliminations		16,649		18,081
	$	182,232	$	201,100

The segment net sales reported above represent sales to external customers.  Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a

10%

mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2020		2019		2020		2019
Lighting Segment inter-segment net sales	$	744	$	479	$	2,415	$	1,758
Graphics Segment inter-segment net sales	$	153	$	96	$	251	$	171

The Company’s operations are located solely within North America. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within North America.

XML

Note 7 - Goodwill and Other Intangible Assets

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE

7

 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company

may

first

assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than

not

that goodwill and indefinite-lived assets are

not

impaired,

no

further testing is required. If it is determined more likely than

not

that goodwill and indefinite-lived assets are impaired, or if the Company elects

not

to

first

assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The fair value measurements of the reporting units are based on significant inputs

not

observable in the market and thus represent Level

3

measurements as defined by ASC

820

“Fair Value Measurements.” The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets

may

have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities

may

signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of

two

reporting units that contain goodwill. There is

one

reporting unit within the Lighting Segment and

one

reporting unit within the Graphics Segment. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but

not

limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

As of

March 1, 2020,

the Company performed its annual goodwill impairment test on the

two

reporting units that contain goodwill. The preliminary goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of

$31.6

million or

33%

above the carrying value of this reporting unit including goodwill. The preliminary goodwill impairment test of the reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value of

$4.7

million or

619%

above the carrying value of the reporting unit including goodwill. The definitive impairment test is expected to be completed in the

fourth

quarter of fiscal

2020.

It is anticipated that the results of the test will

not

change when the test is complete.

A significant decline in the Company’s stock price during

March 2020

related to the COVID-

19

pandemic led management to conclude that a triggering event occurred. As a result, an interim goodwill impairment test subsequent to the

March 1

testing date was required for both reporting units as of

March 31, 2020

. 

The result of the impairment test on both reporting units indicated that goodwill was

not

impaired

.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

Goodwill
(In thousands)	Lighting			Graphics
	Segment			Segment			Total
Balance as of June 30, 2019
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of June 30, 2019	$	9,208		$	1,165		$	10,373
Balance as of March 31, 2020
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of March 31, 2020	$	9,208		$	1,165		$	10,373

The Company performed its annual review of indefinite-lived intangible assets as of

March 1, 2020

and determined there was

no

impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value of

$16.8

million or

392%

above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the

fourth

quarter of fiscal

2020.

It is anticipated that the results of the test will

not

change when the test is complete.

The following table presents the gross carrying amount and accumulated amortization by each major asset class:

Other Intangible Assets	March 31, 2020
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	13,614	$	21,949
Patents		338		270		68
LED technology firmware, software		16,066		12,731		3,335
Trade name		2,658		801		1,857
Total Amortized Intangible Assets		54,625		27,416		27,209
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	27,416	$	30,631

Other Intangible Assets	June 30, 2019
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	12,070	$	23,493
Patents		338		247		91
LED technology firmware, software		16,066		12,364		3,702
Trade name		2,658		719		1,939
Total Amortized Intangible Assets		54,625		25,400		29,225
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	25,400	$	32,647

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2020		2019		2020		2019
Amortization Expense of Other Intangible Assets	$	670	$	691	$	2,016	$	2,071

The Company expects to record annual amortization expense as follows:

(In thousands)
2020	$	2,687
2021	$	2,682
2022	$	2,459
2023	$	2,412
2024	$	2,412
After 2024	$	16,573

XML

Note 1 - Interim Condensed Consolidated Financial Statements

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Condensed Financial Statements [Text Block]

NOTE

1

 -

 INTERIM

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of

March 31, 2020,

the results of its operations for the

three

and

nine

month periods ended

March 31, 2020

and

2019,

and its cash flows for the

nine

month periods ended

March 31, 2020

and

2019.

These statements should be read in conjunction with the financial statements and footnotes included in the fiscal

2019

Annual Report on Form

10

-K.  Financial information as of

June 30, 2019

has been derived from the Company’s audited consolidated financial statements.

XML

Note 16 - Income Taxes (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2020			2019			2020			2019
Reconciliation of effective tax rate:
Provision for income taxes at the anticipated annual tax rate		10.8	%		(0.7	)%		16.7	%		13.6	%
Uncertain tax positions		1.5			(0.1	)		(0.3	)		0.6
Deferred income tax adjustments		(16.7	)		-			(2.5	)		6.7
Shared-based compensation		4.4			(3.6	)		3.7			(0.9	)
Effective tax rate		-	%		(4.4	)%		17.6	%		20.0	%

XML

Note 11 - Supplemental Cash Flow Information (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Nine Months Ended
(In thousands)	March 31
	2020		2019
Cash Payments:
Interest	$	889	$	1,669
Income taxes	$	8	$	3
Non-cash investing and financing activities
Issuance of common shares as compensation	$	225	$	265
Issuance of common shares to fund deferred compensation plan	$	296	$	257

XML

Note 9 - Cash Dividends (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Apr. 30, 2020	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2020
Payments of Dividends, Total		$ 3,958,000	$ 3,882,000
Dividends Accrued		$ 59,077	$ 40,798
Forecast [Member]
Annual Indicated per Share Dividend Rate (in dollars per share)				$ 0.20
Subsequent Event [Member]
Quarterly Indicated Per Share Dividend Rate (in dollars per share)	$ 0.05
Dividends Payable, Date to be Paid	May 12, 2020
Dividends Payable, Date of Record	May 04, 2020

XML

Note 13 - Severance Costs (Details Textual) - Employee Severance [Member]	Mar. 31, 2020 USD ($)
Postemployment Benefits Liability, Total	$ 726,000
Postemployment Benefits Liability, Current	612,000
Postemployment Benefits Liability, Noncurrent	$ 114,000

XML

Note 15 - Leases - Operating Lease Information (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)
Operating lease cost	$ 574	$ 1,736
Fixed payments		1,707
Liability reduction		1,334
Operating Lease, Right-of-Use Asset	9,050	9,050
Accrued expenses (Current liabilities)	362	362
Long-term operating lease liability (Other long-term liabilities)	9,440	9,440
Operating Lease, Liability, Total	$ 9,802	$ 9,802
Weighted Average remaining Lease Term (in years) (Year)	4 years 295 days	4 years 295 days
Weighted Average Discount Rate	4.85%	4.85%

XML

Note 7 - Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Goodwill	$ 123,254	$ 123,254
Accumulated impairment losses	(112,881)	(112,881)
Goodwill, net	10,373	10,373
Lighting Segment [Member]
Goodwill	94,564	94,564
Accumulated impairment losses	(85,356)	(85,356)
Goodwill, net	9,208	9,208
Graphics Segment [Member]
Goodwill	28,690	28,690
Accumulated impairment losses	(27,525)	(27,525)
Goodwill, net	$ 1,165	$ 1,165

XML

Note 4 - Earnings Per Common Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
BASIC EARNINGS PER SHARE
Net income (loss)		$ 1,861	$ (3,168)	$ 8,079	$ (17,201)
Weighted average shares outstanding during the period, net of treasury shares (in shares)	[1]	26,151	25,893	26,087	25,828
Weighted average vested restricted stock units outstanding (in shares)		144	206	156	215
Weighted average shares outstanding (in shares)		26,301	26,132	26,250	26,083
Basic income (loss) per share (in dollars per share)		$ 0.07	$ (0.12)	$ 0.31	$ (0.66)
Basic (in shares)		26,301	26,132	26,250	26,083
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any (in shares)	[1]	322		173
Weighted average shares outstanding (in shares)	[1]	26,623	26,132	26,423	26,083
Diluted income (loss) per share (in dollars per share)		$ 0.07	$ (0.12)	$ 0.31	$ (0.66)
Anti-dilutive securities (b) (in shares)	[2]	1,875	3,788	2,038	3,702
Restricted Stock Units (RSUs) [Member]
BASIC EARNINGS PER SHARE
Weighted average vested restricted stock units outstanding (in shares)		6	33	7	40

[1] Calculated using the Treasury Stock method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

[2] Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2020 because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the awards exercise or vesting was greater than the average fair market price of the common shares. For the three and nine months ended March 31, 2019, the effect of dilutive securities was not included in the calculation of diluted loss per share because there was a net loss for the period.

XML

Note 3 - Segment Reporting Information (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Number of Operating Segments			2
Intersegment Revenue Markup Percentage			10.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage	0.00%	0.00%	0.00%	0.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage			0.00%		0.00%

XML

Note 13 - Severance Costs

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

NOTE

1

3

– SEVERANCE COSTS

The activity in the Company’s accrued severance liability is as follows for the periods indicated:

	Nine Months			Nine Months			Fiscal Year
	Ended			Ended			Ended
	March 31,			March 31,			June 30,
(In thousands)	2020			2019			2019
Balance at beginning of period	$	1,134		$	1,772		$	1,772
Accrual of expense		73			534			560
Payments		(481	)		(956	)		(1,198	)
Balance at end of period	$	726		$	1,350		$	1,134

Of the total

$726,000

severance reserve reported as of

March 31, 2020,

$612,000

has been classified as a current liability and will be paid out over the next

twelve

months. The remaining

$114,000

has been classified as a long-term liability.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Consolidation:

A summary of the Company’s significant accounting policies is included in Note

1

to the audited consolidated financial statements of the Company’s fiscal

2019

Annual Report on Form

10

-K. Significant changes to our accounting policies as a result of adopting ASU-

2014

-

09

“Revenue from Contracts with Customers” (Topic

606

) in the

first

quarter of fiscal

2019

and adopting ASU

2016

-

02,

“Leases” in the

first

quarter of fiscal

2020

are discussed below.

Revenue [Policy Text Block]

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within

30

to

90

days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do

not

represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is

not

a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is

not

always responsible for installation of products it sells and has

no

post-installation responsibilities other than standard warranties.

A number of the Company's Graphics and select lighting products are highly customized for specific customers. As a result, these customized products do

not

have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does

not

accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is

no

alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore, recognizes revenue over time. The customized product types are as follows:

● Customer specific print graphics branding

● Electrical components based on customer specifications

● Digital signage and related media content

The Company also offers installation services for its Graphics and select lighting products. Installation revenue is recognized over time as our customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the contract.

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table presents a reconciliation of the disaggregation by reportable segments.

	Three Months Ended				Nine Months Ended
(In thousands)	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	43,222	$	15,093	$	147,260	$	50,339
Products and services transferred over time		5,791		6,904		18,380		26,109
	$	49,013	$	21,997	$	165,640	$	76,448

	Three Months Ended				Nine Months Ended
	March 31, 2020				March 31, 2020
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	42,536	$	2,234	$	143,615	$	13,515
Legacy products		5,949		14,444		20,252		47,155
Turnkey services and other		528		5,319		1,773		15,778
	$	49,013	$	21,997	$	165,640	$	76,448

Legacy products include lighting fixtures utilizing light sources other than LED technology and printed

two

- and

three

-dimensional graphic products. Turnkey services and other includes project management and installation services along with shipping and handling charges.

Practical Expedients and Exemptions

● The Company’s contracts with customers have an expected duration of one year or less, as such the Company applies the practical expedient to expense sales commissions as incurred, and have omitted disclosures on the amount of remaining performance obligations.

● Shipping costs that are not material in context of the delivery of products are expensed as incurred.

● The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing, therefore, payments do not contain significant financing components.

● The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements:

On

July 1, 2018,

the Company adopted ASU

2014

-

09.

“Revenue from Contracts with Customers,” (Topic

606

) using the modified retrospective adoption method which requires a cumulative effect adjustment to the opening balance of retained earnings. This approach was applied to contracts that were

not

completed as of

June 30, 2018.

Results for reporting periods beginning

July 1, 2018

are presented under Topic

606,

while prior period amounts are

not

adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net increase to beginning retained earnings of

$591,000

on

July 1, 2018

due to the cumulative impact of adopting Topic

606,

as described below.

ASC 606 Cumulative Impact
(in thousands)	Balance as of					Balance as of
	June 30, 2018		Adjustments			July 1, 2018
Assets:
Accounts receivable, net	$	50,609	$	4,935		$	55,544
Inventories, net	$	50,994	$	(4,167	)	$	46,827
Other long-term assets, net	$	9,786	$	(177	)	$	9,609
Shareholder's Equity:
Retained earnings	$	15,124	$	591		$	15,715

In

February 2016,

the Financial Accounting Standards Board issued ASU

2016

-

02,

“Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal and interim periods within those years, beginning after

December 15, 2018,

or the Company’s fiscal

2020,

with early adoption permitted. The Company adopted this guidance effective

July 1, 2019

using a modified-retrospective transition method, under which it elected

not

to adjust comparative periods. The Company elected the package of practical expedients permitted under the new guidance to

not

reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. In addition, the Company elected the practical expedient to

not

separate lease and non-lease component and the accounting policy election to

not

present leases with an initial term of

twelve

months or less on the balance sheet.

The Company’s most significant leases are those relating to certain manufacturing facilities along with a small office space. Besides these real estate leases, most other leases are insignificant and consist of leases related to a vehicle, forklifts, small tooling, and various office equipment. All of the Company’s leases are operating leases and are included in other long-term assets with the corresponding liability in other long-term liabilities. Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use assets (ROU assets) of

$10.4

million and lease liabilities of

$10.8

million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of

July 1, 2019

for the Company’s real estate leases. The adoption of the standard resulted in

no

material impact to consolidated statements of operations or consolidated statements of cash flow. (Refer to Note

15

)

Subsequent Events, Policy [Policy Text Block]

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed.  

No

items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements other than noted below.

In

December 2019,

a novel coronavirus disease (“COVID-

19”

) was reported and in

January 2020,

the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On

February 28, 2020,

the WHO raised its assessment of the COVID-

19

threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on

March 11, 2020,

the WHO characterized COVID-

19

as a pandemic.

As of the date of this filing, the Company’s locations and primary suppliers continue to be operating. However, the broader implications of COVID-

19

on the Company’s results of operations and overall financial performance remain uncertain. The Company

may

experience constrained supply or slowed customer demand that could materially impact its business, results of operations and overall financial performance in future periods. See

Risk Factors

in Part II, Item

1A

of this Form

10

-Qfor further discussion of the possible impact of the COVID-

19

pandemic on the Company’s business

.

XML

Note 5 - Inventories (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
(In thousands)	2020		2019
Inventories:
Raw materials	$	29,457	$	27,927
Work-in-progress		1,592		2,193
Finished goods		12,548		13,392
Total Inventories	$	43,597	$	43,512

XML

Note 2 - Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Revenue	$ 71,010	$ 72,832	$ 242,088	$ 247,330
Lighting Segment [Member]
Revenue	49,013	52,785	165,640	177,871
Lighting Segment [Member] | LED Lighting, Digital Signage, Electronic Circuit Boards [Member]
Revenue	42,536		143,615
Lighting Segment [Member] | Legacy Products [Member]
Revenue	5,949		20,252
Lighting Segment [Member] | Turnkey Services and Other [Member]
Revenue	528		1,773
Graphics Segment [Member]
Revenue	21,997	$ 20,047	76,448	$ 69,459
Graphics Segment [Member] | LED Lighting, Digital Signage, Electronic Circuit Boards [Member]
Revenue	2,234		13,515
Graphics Segment [Member] | Legacy Products [Member]
Revenue	14,444		47,155
Graphics Segment [Member] | Turnkey Services and Other [Member]
Revenue	5,319		15,778
Transferred at Point in Time [Member] | Lighting Segment [Member]
Revenue	43,222		147,260
Transferred at Point in Time [Member] | Graphics Segment [Member]
Revenue	15,093		50,339
Transferred over Time [Member] | Lighting Segment [Member]
Revenue	5,791		18,380
Transferred over Time [Member] | Graphics Segment [Member]
Revenue	$ 6,904		$ 26,109

XML

Note 14 - Restructuring Costs (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Restructuring and Related Costs [Table Text Block]

	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2020			2019		2020			2019
Severance benefits	$	-		$	263	$	-		$	484
Impairment of fixed assets and accelerated depreciation		-			-		49			228
Facility repairs		-			52		-			99
Gain on sale of facility		(3,741	)		-		(8,562	)		-
Exit costs		235			53		419			113
Manufacturing realignment costs		-			-		276			-
Total	$	(3,506	)	$	368	$	(7,818	)	$	924

Schedule of Liability Balances Related to Restructuring Costs [Table Text Block]

	Balance as of									Balance as of
	June 30,		Restructuring							March 31,
(In thousands)	2019		Expense		Payments			Adjustments		2020
Severance and termination benefits	$	236	$	-	$	(209	)	$	-	$	27
Other restructuring costs		-		695		(695	)		-	$	-
Total	$	236	$	695	$	(904	)	$	-	$	27

XML

Note 6 - Accrued Expenses (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	March 31,		June 30,
(In thousands)	2020		2019
Accrued Expenses:
Compensation and benefits	$	5,095	$	5,319
Customer prepayments		1,443		1,768
Accrued sales commissions		1,556		1,301
Accrued warranty		7,464		7,687
Other accrued expenses		4,548		5,136
Total Accrued Expenses	$	20,106	$	21,211

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net income (loss)	$ 1,861	$ (3,168)	$ 8,079	$ (17,201)
Foreign currency translation adjustment	(116)		(110)
Comprehensive Income (Loss)	$ 1,745	$ (3,168)	$ 7,969	$ (17,201)

XML

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Dividend per share (in dollars per share)	$ 0.20	$ 0.20

XML

Note 5 - Inventories

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

5

 - INVENTORIES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2020		2019
Inventories:
Raw materials	$	29,457	$	27,927
Work-in-progress		1,592		2,193
Finished goods		12,548		13,392
Total Inventories	$	43,597	$	43,512

XML

Note 9 - Cash Dividends

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

9

 -

 CASH

DIVIDENDS

The Company paid cash dividends of

$3,958,000

and

$3,882,000

in the

nine

months ended

March 31, 2020

and

2019,

respectively. Dividends on restricted stock units in the amount of

$59,077

and

$40,798

were accrued as of

March 31, 2020

and

2019,

respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In

April 2020,

the Board of Directors declared a regular quarterly cash dividend of

$0.05

per share payable

May 12, 2020

to shareholders of record as of

May 4, 2020

.

The indicated annual cash dividend rate is

$0.20

per share.

XML

Note 7 - Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2020 USD ($)
2020	$ 2,687
2021	2,682
2022	2,459
2023	2,412
2024	2,412
After 2024	$ 16,573

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Note 11 - Supplemental Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Payments:
Interest	$ 889	$ 1,669
Income taxes	8	3
Issuance of common shares as compensation	225	265
Issuance of common shares to fund deferred compensation plan	$ 296	$ 257

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Note 14 - Restructuring Costs (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Sep. 30, 2019	Mar. 31, 2020	Mar. 31, 2019
Proceeds from Sale of Property, Plant, and Equipment, Total			$ 20,040,000
Inventory Write-down			1,720,000	$ 2,574,000
Restructuring and Related Costs, Incurred Cost, Total	$ 235,000		$ 744,000
Sell Manufacturing Facility In New Windsor, New York [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total		$ 12,300,000
Gain (Loss) on Disposition of Property Plant Equipment, Total		$ 4,800,000
Sale of Manufacturing Facility in North Canton, Ohio [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total	7,700,000
Gain (Loss) on Disposition of Property Plant Equipment, Total	3,700,000
Inventory Write-down	$ 451,000

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Note 15 - Leases (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Lease, Cost [Table Text Block]

	Three months ended		Nine months ended
(In thousands)	March 31, 2020		March 31, 2020
Operating lease cost	$	574	$	1,736

Supplemental Cash Flow Information:
	Nine months ended
(In thousands)	March 31, 2020
Operating cash flows from operating leases
Fixed payments		1,707
Liability reduction		1,334

Operating Leases:
	At March 31, 2020
Total operating right-of-use asset (Other long-term assets)		9,050
Accrued expenses (Current liabilities)		362
Long-term operating lease liability (Other long-term liabilities)		9,440
		9,802
Weighted Average remaining Lease Term (in years)		4.81
Weighted Average Discount Rate		4.85	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Maturities of Lease Liability:
2020	955
2021	2,303
2022	2,279
2023	2,244
2024	1,917
Thereafter	1,683
Total lease payments	11,381
Less: Interest	(1,579	)
Present Value of Lease Liabilities	9,802

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Note 7 - Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Goodwill [Table Text Block]

Goodwill
(In thousands)	Lighting			Graphics
	Segment			Segment			Total
Balance as of June 30, 2019
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of June 30, 2019	$	9,208		$	1,165		$	10,373
Balance as of March 31, 2020
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of March 31, 2020	$	9,208		$	1,165		$	10,373

Schedule of Intangible Assets and Goodwill [Table Text Block]

Other Intangible Assets	March 31, 2020
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	13,614	$	21,949
Patents		338		270		68
LED technology firmware, software		16,066		12,731		3,335
Trade name		2,658		801		1,857
Total Amortized Intangible Assets		54,625		27,416		27,209
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	27,416	$	30,631

Other Intangible Assets	June 30, 2019
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	12,070	$	23,493
Patents		338		247		91
LED technology firmware, software		16,066		12,364		3,702
Trade name		2,658		719		1,939
Total Amortized Intangible Assets		54,625		25,400		29,225
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422
Total Other Intangible Assets	$	58,047	$	25,400	$	32,647

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2020		2019		2020		2019
Amortization Expense of Other Intangible Assets	$	670	$	691	$	2,016	$	2,071

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

(In thousands)
2020	$	2,687
2021	$	2,682
2022	$	2,459
2023	$	2,412
2024	$	2,412
After 2024	$	16,573

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Note 2 - Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2018
Accounts receivable, net	$ 45,957	$ 54,728	$ 55,544	$ 50,609
Inventories, net	43,597	43,512	46,827	50,994
Other long-term assets, net	21,238	15,124	9,609	9,786
Retained earnings	$ (2,115)	$ (5,808)	15,715	$ 15,124
Revision of Prior Period, Adjustment [Member]
Accounts receivable, net			4,935
Inventories, net			(4,167)
Other long-term assets, net			(177)
Retained earnings			$ 591

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Note 4 - Earnings Per Common Share

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

4

- EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	March 31					March 31
	2020		2019			2020		2019
BASIC EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding during the period, net of treasury shares		26,151		25,893			26,087		25,828
Weighted average vested restricted stock units outstanding		6		33			7		40
Weighted average shares outstanding in the Deferred Compensation Plan during the period		144		206			156		215
Weighted average shares outstanding		26,301		26,132			26,250		26,083
Basic income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
DILUTED EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding
Basic		26,301		26,132			26,250		26,083
Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		322		-			173		-
Weighted average shares outstanding		26,623		26,132			26,423		26,083
Diluted income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
Anti-dilutive securities (b)		1,875		3,788			2,038		3,702

(a) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(b) Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2020  because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares. For the three  and nine months ended March 31, 2019, the effect of dilutive securities was not included in the calculation of diluted loss per share because there was a net loss for the period.

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Note 8 - Revolving Line of Credit

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

8

 - REVOLVING

LINE OF CREDIT

In

February 2019,

the Company amended its secured line of credit to a

$75

million facility from a

$100

million facility in order to better match its financing needs with an appropriate borrowing capacity. The line of credit expires in the

third

quarter of fiscal

2022.

Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate as periodically determined, or at the bank’s base lending rate, at the Company’s option. The increment over the LIBOR borrowing rate, as periodically determined, fluctuates between

125

and

250

basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will be

125

basis points for the

fourth

quarter of fiscal

2020.

 The fee on the unused balance of the

$75

million committed line of credit is

20

basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge coverage ratio. As of

March 31, 2020,

there was

$7.9

million borrowed against the line of credit, and

$67.1

million was available as of that date. Based on the terms of the line of credit and the maturity date, the debt has been classified as long term.

The Company is in compliance with all of its loan covenants as of

March 31, 2020.

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net Sales		$ 71,010	$ 72,832	$ 242,088	$ 247,330
Cost of products and services sold		54,834	57,180	183,558	190,207
Restructuring costs		223	261	758	792
Severance costs		11	54	11	77
Gross profit		15,942	15,337	57,761	56,254
Selling and administrative expenses		17,032	17,515	55,045	54,990
Restructuring (gain) costs		(3,729)	107	(8,576)	132
Severance costs		8	(12)	62	457
Impairment of goodwill					20,165
Transition and realignment costs					120
Operating income (loss)		2,631	(2,273)	11,230	(19,610)
Interest (income)		(1)	(6)	(3)	(37)
Interest expense		129	585	795	1,749
Other expense		642	183	633	183
Income (loss) before income taxes		1,861	(3,035)	9,805	(21,505)
Income tax expense (benefit)			133	1,726	(4,304)
Net income (loss)		$ 1,861	$ (3,168)	$ 8,079	$ (17,201)
Earnings (loss) per common share (see Note 4)
Basic (in dollars per share)		$ 0.07	$ (0.12)	$ 0.31	$ (0.66)
Diluted (in dollars per share)		$ 0.07	$ (0.12)	$ 0.31	$ (0.66)
Weighted average common shares outstanding
Basic (in shares)		26,301	26,132	26,250	26,083
Diluted (in shares)	[1]	26,623	26,132	26,423	26,083

[1] Calculated using the Treasury Stock method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock Including Additional Paid in Capital [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Treasury Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Key Executive Deferred Compensation [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock Including Additional Paid in Capital [Member]	Treasury Stock [Member]	Key Executive Deferred Compensation [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Jun. 30, 2018							25,884	(242)
Balance at Jun. 30, 2018					$ 591	$ 591	$ 124,104	$ (2,110)	$ 2,133		$ 15,124	$ 139,251
Net income (loss)											(17,201)	(17,201)
Other comprehensive income
Stock compensation awards (in shares)							70
Stock compensation awards							$ 265					265
Restricted stock units issued (in shares)							98
Restricted stock units issued
Shares issued for deferred compensation (in shares)							65
Shares issued for deferred compensation							$ 257					257
Activity of treasury shares, net (in shares)								19
Activity of treasury shares, net								$ 481				481
Deferred stock compensation									(474)			(474)
Stock-based compensation expense							951					951
Dividends — $0.20 per share											(3,882)	(3,882)
Balance (in shares) at Mar. 31, 2019							26,117	(223)
Balance at Mar. 31, 2019							$ 125,577	$ (1,629)	1,659		(5,368)	120,239
Balance (in shares) at Jun. 30, 2019							26,176	(209)
Balance at Jun. 30, 2019					$ (428)	$ (428)	$ 125,729	$ (1,468)	1,468	16	(5,808)	119,937
Net income (loss)											8,079	8,079
Other comprehensive income										(110)		(110)
Stock compensation awards (in shares)							48
Stock compensation awards							$ 225					225
Restricted stock units issued (in shares)							21
Restricted stock units issued
Shares issued for deferred compensation (in shares)							54
Shares issued for deferred compensation							$ 296					296
Activity of treasury shares, net (in shares)								42
Activity of treasury shares, net								$ 411				411
Deferred stock compensation									(413)			(413)
Stock-based compensation expense							494					494
Dividends — $0.20 per share											(3,958)	(3,958)
Stock options exercised, net (in shares)							29
Stock options exercised, net							$ 174					174
Balance (in shares) at Mar. 31, 2020							26,328	(167)
Balance at Mar. 31, 2020							$ 126,918	$ (1,057)	$ 1,055	$ (94)	$ (2,115)	$ 124,707

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Note 13 - Severance Costs - Accrued Severance Liability Activity (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Balance	$ 1,134	$ 1,772	$ 1,772
Accrual of expense	73	534	560
Payments	(481)	(956)	(1,198)
Balance	$ 726	$ 1,350	$ 1,134

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Note 7 - Goodwill and Other Intangible Assets - Amortization Expense of Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Amortization Expense of Other Intangible Assets	$ 670	$ 691	$ 2,016	$ 2,071

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Note 10 - Equity Compensation (Details Textual)	1 Months Ended	3 Months Ended			9 Months Ended
	Nov. 30, 2019 shares	Mar. 31, 2020 USD ($) $ / shares shares	Sep. 30, 2019 shares	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) $ / shares shares	Mar. 31, 2019 USD ($)
Share-based Payment Arrangement, Expense | $		$ (103,000)		$ 224,000	$ 494,000	$ 951,000
The 2019 Omnibus Award Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	2,650,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)		3,812,997			3,812,997
The 2019 Omnibus Award Plan [Member] | Inducement Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)		150,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ / shares		$ 6.51
The 2019 Omnibus Award Plan [Member] | Non-qualified Serviced-based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)			455,429
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares		3.83			$ 3.83
The 2019 Omnibus Award Plan [Member] | Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			199,310
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares		$ 3.83
The 2019 Omnibus Award Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		81,917
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares		$ 3.83
The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fungible Share Ratio	2.5

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Note 15 - Leases (Details Textual) - USD ($)	Mar. 31, 2020	Jul. 01, 2019
Operating Lease, Right-of-Use Asset	$ 9,050,000
Operating Lease, Liability, Total	$ 9,802,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		$ 10,400,000
Operating Lease, Liability, Total		$ 10,800,000
Minimum [Member]
Operating Lease, Weighted Average Remaining Lease Term (Year)	1 year
Maximum [Member]
Operating Lease, Weighted Average Remaining Lease Term (Year)	5 years

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Note 16 - Income Taxes - Reconciliation of Income Tax Rate (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Provision for income taxes at the anticipated annual tax rate	10.80%	(0.70%)	16.70%	13.60%
Uncertain tax positions	1.50%	(0.10%)	(0.30%)	0.60%
Deferred income tax adjustments	(16.70%)		(2.50%)	6.70%
Shared-based compensation	4.40%	(3.60%)	3.70%	(0.90%)
Effective tax rate		(4.40%)	17.60%	20.00%

XML

Note 5 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2018
Inventories:
Raw materials	$ 29,457	$ 27,927
Work-in-progress	1,592	2,193
Finished goods	12,548	13,392
Total Inventories	$ 43,597	$ 43,512	$ 46,827	$ 50,994

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Note 3 - Segment Reporting Information - Summarized Financial Information by Reportable Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net Sales	$ 71,010	$ 72,832	$ 242,088	$ 247,330
Operating income (loss)	2,631	(2,273)	11,230	(19,610)
Capital expenditures	419	769	1,538	2,348
Depreciation and amortization	2,080	2,552	6,631	7,787
Corporate and Eliminations [Member]
Operating income (loss)	(2,486)	(2,066)	(8,575)	(8,049)
Capital expenditures	59		246	200
Depreciation and amortization	83	236	435	737
Lighting Segment [Member]
Net Sales	49,013	52,785	165,640	177,871
Lighting Segment [Member] | Operating Segments [Member]
Operating income (loss)	1,102	691	13,411	(13,911)
Capital expenditures	126	769	1,013	1,633
Depreciation and amortization	1,650	1,925	5,089	5,867
Graphics Segment [Member]
Net Sales	21,997	20,047	76,448	69,459
Graphics Segment [Member] | Operating Segments [Member]
Operating income (loss)	4,015	(898)	6,394	2,350
Capital expenditures	234		279	515
Depreciation and amortization	$ 347	$ 391	$ 1,107	$ 1,183

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Note 7 - Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Amortized intangible assets, gross	$ 54,625	$ 54,625
Accumulated amortization	27,416	25,400
Amortized intangible assets, net	27,209	29,225
Indefinite-lived intangible assets, gross	3,422	3,422
Total other intangible assets, gross	58,047	58,047
Total other intangible assets, net	30,631	32,647
Trademarks and Trade Names [Member]
Indefinite-lived intangible assets, gross	3,422	3,422
Customer Relationships [Member]
Amortized intangible assets, gross	35,563	35,563
Accumulated amortization	13,614	12,070
Amortized intangible assets, net	21,949	23,493
Patents [Member]
Amortized intangible assets, gross	338	338
Accumulated amortization	270	247
Amortized intangible assets, net	68	91
Technology-Based Intangible Assets [Member]
Amortized intangible assets, gross	16,066
Accumulated amortization	12,731
Amortized intangible assets, net	3,335
LED Technology Firmware Software [Member]
Amortized intangible assets, gross		16,066
Accumulated amortization		12,364
Amortized intangible assets, net		$ 3,702
Trade Names [Member]
Amortized intangible assets, gross	2,658
Accumulated amortization	801
Amortized intangible assets, net	$ 1,857

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Note 4 - Earnings Per Common Share (Tables)

9 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended					Nine Months Ended
	March 31					March 31
	2020		2019			2020		2019
BASIC EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding during the period, net of treasury shares		26,151		25,893			26,087		25,828
Weighted average vested restricted stock units outstanding		6		33			7		40
Weighted average shares outstanding in the Deferred Compensation Plan during the period		144		206			156		215
Weighted average shares outstanding		26,301		26,132			26,250		26,083
Basic income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
DILUTED EARNINGS PER SHARE
Net income (loss)	$	1,861	$	(3,168	)	$	8,079	$	(17,201	)
Weighted average shares outstanding
Basic		26,301		26,132			26,250		26,083
Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		322		-			173		-
Weighted average shares outstanding		26,623		26,132			26,423		26,083
Diluted income (loss) per share	$	0.07	$	(0.12	)	$	0.31	$	(0.66	)
Anti-dilutive securities (b)		1,875		3,788			2,038		3,702

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Note 12 - Commitments and Contingencies

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

1

2

-

COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does

not

disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will

not

have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company

may

occasionally issue a standby letter of credit in favor of

third

parties. As of

March 31, 2020,

there were

no

such standby letters of credit issued.

XML

Note 16 - Income Taxes

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

1

6

– INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in

March 2020.

The CARES Act allowed the Company to utilize a Net Operating Loss (NOL) Carryback resulting in a revaluation of its deferred tax assets creating a favorable impact of

$0.3

million in the

third

quarter of fiscal

2020.

In addition, the Company sold its North Canton, Ohio facility in the

third

quarter of fiscal

2020

resulting in a book gain of

$3.7

million. The sale generated a capital gain during the quarter resulting in a tax benefit due to the utilization of a capital loss carryforward, which reduced the anticipated full year estimated effective income tax rate.

In the

first

quarter of fiscal

2020,

the Company sold its New Windsor, New York facility resulting in a book gain of

$4.8

million. The Company was able to utilize a deferred tax asset of

$864,000

related to the sale of the facility.

In the

second

quarter of fiscal

2019,

a deferred tax asset of

$4.8

million was created as a result of the impairment of goodwill in the Lighting reporting unit.

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2020			2019			2020			2019
Reconciliation of effective tax rate:
Provision for income taxes at the anticipated annual tax rate		10.8	%		(0.7	)%		16.7	%		13.6	%
Uncertain tax positions		1.5			(0.1	)		(0.3	)		0.6
Deferred income tax adjustments		(16.7	)		-			(2.5	)		6.7
Shared-based compensation		4.4			(3.6	)		3.7			(0.9	)
Effective tax rate		-	%		(4.4	)%		17.6	%		20.0	%